1How much tax can I save with NPS?
An extra Rs 50,000 deduction under 80CCD(1B), over and above 80C. On top of that, employer NPS under 80CCD(2) gives up to 14% of salary — and that one works even in the new regime.
Quick answer
The National Pension System offers deductions no other product does — the extra Rs 50,000 under 80CCD(1B) and employer NPS under 80CCD(2) that even survives the new regime.
This is NPS's headline benefit: a deduction of up to Rs 50,000 that sits on top of the Rs 1,50,000 under 80C, in the old regime. No other product gives you this additional slice, so if you've already filled 80C, your own NPS contribution is the natural next step.
If your employer contributes to your NPS, you get a deduction of up to 14% of salary (basic + DA) under 80CCD(2) — and crucially, this works even in the new regime (it's 10% in the old). Restructuring part of your CTC into employer-NPS can cut tax without changing take-home much. Ask HR if it's available.
Your personal NPS contribution can count under 80CCD(1) within the Rs 1,50,000 80C limit, or under the separate Rs 50,000 80CCD(1B) — but not both for the same rupee. The smart order is to use 80CCD(1B) for the extra Rs 50,000, and keep 80C for other investments.
NPS is locked until retirement, with limited partial withdrawals and rules on how much must be annuitised at the end. That long lock-in is the price of the extra deduction, so contribute amounts you won't need before retirement — don't over-allocate purely to chase the tax break.
Decide how much NPS fits your retirement plan and cash flow, claim the Rs 50,000 under 80CCD(1B), and layer employer NPS on top if offered. Automating the contribution early in the year beats a last-minute March scramble.
An extra Rs 50,000 deduction under 80CCD(1B), over and above 80C. On top of that, employer NPS under 80CCD(2) gives up to 14% of salary — and that one works even in the new regime.
Yes — employer NPS under 80CCD(2). Your own 80C/80CCD(1B) deductions don't apply in the new regime, but employer contribution up to 14% of salary still does.
Yes, but not for the same money. Use 80CCD(1B) for the extra Rs 50,000 and keep the Rs 1,50,000 80C limit for other investments; the same contribution can't be claimed twice.
Want to size your NPS contribution for both tax and retirement? Write to the firm.