I am a Central Government employee. I am contributing to the New Pension Scheme (NPS) at 10 per cent of my salary. The NPS contribution is recovered from my salary and credited into my NPS account. I have been saving ₹1,50,000 (on account of PPF, Insurance, FD etc excluding NPS amount) and requested my employer to consider my NPS contribution of 10 per cent of salary of ₹40,062 under Sec 80CCD(1b). My employer states that saving benefit cannot be claimed over and above ₹1,50,000. I understand that I can save up to ₹2 lakh (Under 80C ₹1.50 lakh and under Sec 80CCD(1b) ₹50.000).

I am deaf and dumb and my wife is also deaf and dumb. She is not employed and is dependant on me. My employer is giving me benefit under Sec 80U for ₹1,25,000 per year. I requested my employer to give benefit of handicapped dependant under Sec 80DD for my wife, for which the employer is insisting on me producing expenditure details for my wife.

Sailesh Bagde, Pune

An employee can get a deduction u/s 80CCD(1) of an amount up to 10 per cent of his salary for contribution made towards pension scheme approved by the Central Government (National Pension Scheme ‘NPS’). However, the deduction u/s 80CCD(1) is subject to an overall limit of ₹1,50,000 (including the deduction claimed u/s 80C and 80CCC). Further, from financial year 2015-16, an additional deduction u/s 80CCD(1B) of up to ₹50,000 is allowed in respect of contribution made towards NPS provided that the deduction for such contribution is not claimed u/s 80CCD(1).

We understand that you have already exhausted the limit of ₹1,50,000 on account of your deduction u/s 80C.. Thus, you may claim the deduction for your contribution towards the NPS u/s 80CCD(1B) subject to maximum of ₹50,000 for FY 2015-16 and onwards.

With regard to your second query, I would like to highlight that Section 80U provides for a flat deduction of ₹75,000 (₹1,25,000 in the case of severe disability), that is, the quantum of deduction is irrespective of the amount of expenditure incurred on the medical treatment. However, Section 80DD provides for deduction of amounts incurred in respect of the expenditure for the medical treatment (inducing nursing), training and rehabilitation of a dependent family member (as defined, which includes spouse), being a person with a disability up to a maximum of ₹75,000 (₹125,000 in the case of severe disability).

In other words, deduction u/s 80DD is based on the actual expenditure incurred on the medical treatments whereas deduction u/s 80U is irrespective of whether any medical expenditure has been incurred or not. Thus, your employer is correct in asking for the details of the medical expenses incurred by you for your wife (dependent on you) for providing the deduction u/s 80DD.

Please note that certificate in prescribed form is required from the prescribed medical authority to determine the extent of disability and to claim deductions u/s 80U and 80DD.

The writer is a practising chartered accountant. Send your queries to taxtalk@thehindu.co.in

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