If you are a newbie in the salary structure and are not very sure of what is section 80CCD 2 of income tax act, then let me tell you that it is okay to not know everything at once. I was a newbie a few years back and was a complete noob when it came to financing and salary structure. So, I will tell you all about section 80CCD 2 and the recent advancements in it.
Buy your dream home and also save up taxes by applying for home loans via NoBroker at an interest rate starting from 7.3%.Employers can take an additional amount equal to 10% of the employee's pay as contributions to the employee's pension account. This deduction has no set upper limit. When an employer makes an NPS contribution to an employee, the provisions of this section take effect. Separate from the donations made to the EPF and PPF are the NPS contributions. The amount of the employer's contribution may be greater or equal to the employee's contribution. Only salaried employees are covered by this section; it is not intended for use by independent contractors.
What is 80ccd 2 in income tax and its Terms and Conditions for deductions?
The lists of prerequisites for exclusions under Section 80CCD are as follows:
The maximum deduction amount allowed by this section is Rs. 2 lakhs, with an extra deduction of Rs. 50,000 permitted under subsection 80CCD (1B).
The Provision 80C tax credit cannot be used to offset tax benefits received under this section.
In accordance with Section 80CCD, both salaried employees and independent contractors are eligible for deductions. as it is required of government workers but optional for everyone else.
Tax obligations apply to funds obtained from the National Pension Scheme (NPS) in the form of monthly payments or surrendered accounts.
The entire sum is free of taxes if the money earned from NPS is again invested in the endowment policy.
In relation to capital contributed to the pension scheme, Section 80CCD 2 might be considered a tax advantage for employers. If your company makes a contribution to your NPS account, section 80CCD 2 of the tax code benefits your employer.
This tax benefit is capped at 20% of the employer's annualised gross income.
I hope I was able to explain to you what is section 80CCD 2 of income tax act.
Read More: What is Section 80C of the Income Tax Act? What is section 80D of the income tax act? What is Section 80GG of the Income Tax Act?Your Feedback Matters! How was this Answer?
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What is 80CCD 2 in Income Tax
Garima Raman
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2022-09-06T12:09:30+00:00 2022-09-06T12:09:31+00:00Comment
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