By Sheetal Kumari | March 3, 2025
Moneycontrol PF Team| Aug 19, 2025
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Under the old tax regime, NPS offers multiple deductions for both self and employer contributions.
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Get deduction up to 10% of salary (Basic + DA) under Sec 80CCD(1), within the ₹1.5 lakh limit of Sec 80CCE.
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Avail an additional ₹50,000 tax deduction under Sec 80CCD(1B), over and above Sec 80CCE.
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Employer’s contribution eligible for deduction under Sec 80CCD(2), beyond ₹1.5 lakh Sec 80CCE ceiling.
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Private sector: deduction capped at 10% of salary. Central Govt employees: deduction allowed up to 14% of salary.
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At maturity, up to 60% of the corpus withdrawn as lump sum is tax-free u/s 10(12A).
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At least 40% corpus used for annuity purchase is tax-free u/s 80CCD(5). But annuity income is taxable later.
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Buying annuity via NPS attracts zero GST (vs 1.8% outside NPS).
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Withdrawals allowed under rules are tax-free u/s 10(12B).
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Tier I: ₹500 at opening, ₹1,000/year to keep active. Tier II: ₹1,000 to open, ₹250 per transaction, no annual limit.
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