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How does NPS give an extra ₹50,000 tax deduction?
Updated · CardKhoj Editorial Team
Short answer
Under the old tax regime, your own contribution to the National Pension System (NPS) Tier-I account qualifies for an extra deduction of up to ₹50,000 under Section 80CCD(1B), over and above the ₹1.5 lakh 80C limit. In the new regime this is not available, but your employer's NPS contribution (up to 14% of basic salary) remains deductible.
NPS deductions at a glance
| Contribution | Old regime | New regime |
|---|---|---|
| Your contribution (within 80C) | Up to ₹1.5 lakh (shared limit) | No |
| Your extra contribution — 80CCD(1B) | Up to ₹50,000 | No |
| Employer contribution — 80CCD(2) | Up to 10% of basic + DA | Up to 14% of basic + DA |
Things to know before investing
- Money is locked until age 60, with limited partial withdrawals for specific needs.
- At 60 you can take up to 60% as a tax-free lump sum; the rest buys an annuity (pension), which is taxable.
- You choose your equity and debt mix, and charges are among the lowest of any investment product.
Saving ₹50,000 in the 30% bracket cuts your tax by up to ₹15,600 including cess.
This answer is general information, not personalised financial or tax advice. Rules, rates and limits change — confirm with your bank, the RBI or a qualified adviser before making decisions.