Warning: Room to optimize NPS benefits
You save ₹31,200 but could do more. Maximize CCD(1B) for an extra ₹50K deduction.
•CCD(1B) gives an extra ₹50K deduction over 80C — worth ₹15,600 at 30% slab
•If your 80C is already full, NPS self-contribution directly feeds CCD(1B)
•Ask your employer to restructure CTC to include NPS under CCD(2) — it saves tax in both regimes
Total NPS Benefit
New regime: ₹15,600 (CCD-2 only)
The National Pension System (NPS) offers three separate tax deduction sections, making it one of the most tax-efficient retirement instruments in India. Uniquely, NPS employer contributions are deductible even under the New Tax Regime.
Your own NPS contribution qualifies under Section 80CCD(1), subject to the overall ₹1,50,000 limit of Section 80C. Salaried individuals can claim up to 10% of basic salary, while self-employed can claim up to 20% of gross income.
Section 80CCD(1B) provides an additional ₹50,000 deduction over and above the 80C limit. This is available only in the Old Regime and is exclusive to NPS — no other instrument offers this.
Employer NPS contributions up to 14% of basic salary are deductible under Section 80CCD(2). This is the standout benefit — it works in both Old and New regimes, making it valuable regardless of your regime choice.
CCD(1B) gives an extra ₹50K deduction over 80C — that's up to ₹15,600 in tax savings at 30% slab.
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