NPS tax benefits under new regime for salaried employees

Income Tax Tax Savings & Deductions
1

NPS or National Pension Scheme is a retirement savings scheme and investing in it can help you claim tax benefits.

While most deductions are allowed under the old tax regime, NPS offers tax benefits to salaried employees under the new regime as well.

Here’s an overview of the amount of deductions that you can claim under both regimes.

Tax benefits of NPS under the new regime

Under the new regime, salaried employees can claim a deduction against NPS contributions made by their employer. The maximum contribution and deduction limit is 14% of salary (basic + DA) for both private and public sector employees.

Tax benefits of NPS under the new regime
Tax benefits of NPS under the new regime1010×84 9.72 KB

Tax benefits of NPS under the old regime

Under the old tax regime, you can claim a deduction under 3 sections — 80CCD (1), 80CCD (1B), and 80CCD (2).

Tax benefits of NPS under the old regime
Tax benefits of NPS under the old regime1009×330 38 KB

Note: The deduction under Section 80CCD (1) is grouped with other 80C deductions, like PPF and ELSS funds, with a total limit of ₹1.50 lakh.

Here’s a detailed video on NPS.

1 Like
2

Hello,
What is the maximum permissible deduction for the investment in NPS in old tax regime. Is it only INR 50,000 u/s 80CCD1B, or is it INR 2,00,000 (i.e. 1,50,000+50,000 u/s 80CCD1B)?

3

Hey @Shiv_Katira,

The combined deduction can go up to ₹2L. As most people tend to exhaust the ₹1.5L deduction under section 80C, an additional deduction of ₹50,000 is allowed for investments in NPS. If you do not have any other investments like EPF, ELSS, PPF that are allowed as a deduction under section 80C, you can claim the entire ₹2L (1.5L(80C) + ₹50,000 (80CCD (1b)) deduction for investing in NPS.

1 Like