Section 80CCD and NPS

Background

Section 80CCD covers tax deductions on contributions to the National Pension System (NPS) by employees, self-employed individuals and employers.

Explanation

80CCD(1) allows deduction for your own NPS contribution within percentage-based caps, counting towards the overall 80C/80CCC limit. 80CCD(1B) provides an additional ₹50,000 deduction exclusively for NPS, and 80CCD(2) covers employer contributions within prescribed limits.

Example

You max out ₹1.5 lakh under 80C via EPF and ELSS, then invest another ₹50,000 into NPS under 80CCD(1B). Your taxable income reduces by ₹2 lakh in total, and your retirement corpus grows in a tax-efficient account.

Try the planner

See how this concept fits your own retirement plan.

Retirement Planner | All Retireopedia terms