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Microlesson · 5-min read

Contribution to NPS [Sec 80CCD] and Agnipath/Agniveer Corpus Fund [Sec 80CCH]

## Contribution to NPS and the Agnipath Scheme

### National Pension Scheme (NPS) [Section 80CCD]

  • The employer's contribution to the employee's NPS account is taxed as part of salary under Section 17(1).
  • A deduction under Section 80CCD is then allowed for both the employer's and the employee's contributions while computing the employee's total income.
  • Detailed deduction limits are covered in Chapter VI-A deductions.

### Agniveer Corpus Fund [Section 80CCH]

  • The Central Government's contribution to the Agniveer Corpus Fund is taxed as salary under Section 17(1).
  • Section 80CCH allows a deduction for both the Agniveer's own contribution and the Government's contribution while computing total income.
  • Detailed discussion appears in Chapter VI-A deductions.

### Pattern to remember

In both schemes the third-party (employer / Government) contribution is first included in salary and then deducted — so the net effect depends on the Chapter VI-A deduction limits.

⚠️ Common exam mistakes

  • Forgetting to first include the employer's/Government's contribution in salary under Section 17(1) before claiming the deduction.
  • Allowing the Section 80CCD/80CCH deduction for only one party's contribution rather than both.
  • Confusing the salary-inclusion step with the perquisite treatment of excess contributions under Section 17(2)(vii).
Bare-Act text Sections 80CCD and 80CCH read with Section 17(1) · Income-tax Act, 1961 · click to expand
Employer's contribution to NPS account is taxed in the employee's salary under section 17(1); a deduction under section 80CCD is allowed for both the employer's and employee's contributions. Central Government's contribution to the Agniveer Corpus Fund is taxed as salary under section 17(1); section 80CCH allows a deduction for both the Agniveer's and the Government's contributions to the fund.
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