Key idea
A retirement account with a tax break that sits on top of 80C, plus one benefit that survives even the new regime.
The National Pension System (NPS) is a low-cost, long-term retirement account. Its draw for salaried people is a set of deductions, one of which is genuinely extra.
Three ways NPS is deducted
| Section | What it covers | Note |
|---|---|---|
| 80CCD(1) | Your NPS, inside 80C | Part of the ₹1.5L cap |
| 80CCD(1B) | Your NPS, extra | +₹50,000, over and above 80C |
| 80CCD(2) | Employer's NPS | Also allowed in the new regime |
The standout is 80CCD(1B): an additional ₹50,000 deduction for your own NPS contribution, on top of the ₹1.5 lakh 80C ceiling. For someone who has already used up 80C, it is a rare chance to deduct more.
The new-regime exception
NPS locks money until retirement and pays out partly as a pension, so the trade- off is access. That is the design of a retirement product, and worth weighing against the tax benefit.
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