# NPS Tax Benefit Calculator

> NPS gives three tax benefits: your own contribution within the ₹1.5 lakh 80C limit, an extra ₹50,000 under 80CCD(1B), and your employer's contribution under 80CCD(2). The first two work only in the old regime; the employer contribution — up to 14% of basic + DA in the new regime and 10% in the old — is deductible in both, which makes it the most useful NPS benefit today.

Interactive calculator: https://www.industax.com/calculators/nps-tax-benefit

- **80CCD(1B) extra deduction:** ₹50,000 (old regime)
- **Employer NPS — new regime:** Up to 14% of salary
- **Non-govt exit (2025 rules):** Up to 80% lump sum

## NPS deductions

Employer contributions to NPS, PF and superannuation together above ₹7.5 lakh a year are taxable as perquisites.

| Section | What | Limit | Regime |
| --- | --- | --- | --- |
| 80CCD(1) | Own contribution | Within ₹1.5 lakh 80C; up to 10% of salary (20% of income if self-employed) | Old |
| 80CCD(1B) | Own contribution | Additional ₹50,000 | Old |
| 80CCD(2) | Employer contribution | 14% of basic + DA (new); 10% (old) | Both |

## Exit rules after the 2025 amendment

PFRDA's December 2025 amendment lets non-government subscribers withdraw up to 80% of the corpus as a lump sum at normal exit, with at least 20% used for an annuity (government subscribers keep the 60:40 split), and allows full withdrawal for small corpuses. Under the tax law, a lump sum of up to 60% of the corpus is exempt; check how any additional lump sum will be taxed before withdrawing. Annuity income is taxed at slab rates.

## Worked example: old-regime taxpayer in the 30% slab

1. Own NPS contribution of ₹50,000 under 80CCD(1B), over and above a full 80C.
2. Tax saved = 30% × ₹50,000 = ₹15,000, plus 4% cess = ₹15,600.
3. Employer contributes 10% of ₹12 lakh basic = ₹1,20,000 under 80CCD(2) — saves another ₹37,440 at 30% + cess.

**Result:** Total NPS tax saving ≈ ₹53,040 a year.

## FAQs

### Is the extra ₹50,000 NPS deduction available in the new regime?

No. 80CCD(1B) is an old-regime deduction. In the new regime only the employer's contribution under 80CCD(2) is deductible.

### Should I ask my employer to restructure salary for NPS?

If your employer offers it, routing part of CTC into employer NPS contributions reduces tax in both regimes, within the 14%/10% limits and the ₹7.5 lakh overall cap.

### Can I withdraw NPS before 60?

Partial withdrawals of up to 25% of your own contributions are allowed for specified purposes after the minimum period, and are tax-free. Premature exit has stricter annuity requirements.

## Official sources

- PFRDA — NPS: https://www.pfrda.org.in/
- incometaxindia.gov.in: https://www.incometaxindia.gov.in/

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Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.