Key idea
A low-cost, market-linked retirement account, with tax breaks (including one that survives the new regime) and access mostly at 60.
The National Pension System (NPS) is a retirement-focused account that invests your money in a mix of equity and debt at very low cost. It is designed to build a corpus over your working life and provide income in retirement, with several tax advantages along the way.
The tax angles
| Section | Covers |
|---|---|
| 80CCD(1) | Your NPS, within the ₹1.5L 80C cap |
| 80CCD(1B) | An extra ₹50,000, over and above 80C |
| 80CCD(2) Employer's NPS, allowed even in the new regime |
How it works, in brief
You contribute during your career; the money grows in market-linked funds you can partly choose. Access is mostly locked until age 60, at which point a portion can be withdrawn as a lump sum and the rest is used to provide a regular pension (an annuity). The extra ₹50,000 deduction under 80CCD(1B) and the employer benefit under 80CCD(2) are its notable draws. Rates shown are for the Jul to Sep 2026 quarter and are reviewed quarterly. Confirm the current rate.
NPS trades access for low cost, market growth, and tax breaks aimed at retirement. The lock-in until 60 and the mandatory annuity portion are the trade-offs. Whether it fits your retirement plan is your call.
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