Monday, March 2, 2015

Section 80CCD - Tax Benefits for 2015 - 2016

The pension pie just got bigger, with the FM increasing the deduction limit under the New Pension Scheme (NPS) from Rs 1 lakh to Rs 1.5 lakh.

But the additional deduction of Rs 50,000 proposed under Section 80CCD of the Income Tax Act has left enough room for ambiguity . Besides the deduction allowed under Subsection 1 of 80CCD, the Finance Bill 2015 allows an individual to invest Rs 50,000 under a pension scheme "notified or as may be notified by the central government". It can be an enabling provision for mutual fund (MF) retirement products. But the budget did not provide clarity on whether MFs would be allowed to launch retirement products under Section 80 CCD. Last year, the Budget allowed uniform tax treatment for pension funds and MF-linked retirement plans. Currently , MF-linked retirement plans are eligible for tax deductions under Section 80C of the IT Act. Retirement plans of MFs, however, don't come under the Pension Fund Regulatory and Development Authority now. Earlier, when an individual contributed to an annuity plan of LIC or any other insurer for receiving pen sion, a deduction of up to Rs 1 lakh was allowed. The budget raised this to Rs 1.5 lakh. While savings made under 80C --contribution to provident fund, PPF, insurance premium, equity savings schemes, investments in pension funds (80CCC) and NPS (80CCD) -was capped at Rs 1.5 lakh earlier, it has now been increased by another Rs 50,000.

Another boost for pension could come as the FM said the government will change PF laws after consulting stakeholders and is thinking of a proposal where employees can choose between PF and NPS to make their savings.  
 

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

1.ICICI Prudential Tax Plan

2.Reliance Tax Saver (ELSS) Fund

3.HDFC TaxSaver

4.DSP BlackRock Tax Saver Fund

5.Religare Tax Plan

6.Franklin India TaxShield

7.Canara Robeco Equity Tax Saver

8.IDFC Tax Advantage (ELSS) Fund

9.Axis Tax Saver Fund

10.BNP Paribas Long Term Equity Fund

You can invest Rs 1,50,000 and Save Tax under Section 80C by investing in Mutual Funds

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