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NPS Tax Benefits — Section 80CCD

NPS contributions qualify for tax deductions under multiple sections:

• Section 80CCD(1): Employee contribution up to 10% of salary (self-employed: 20% of gross income), within the Rs 1.5 lakh Section 80C limit.
• Section 80CCD(1B): Additional Rs 50,000 deduction over and above the 80C limit. Your annual contribution of Rs 60,000 qualifies for Rs 50,000 deduction under this section.
• Section 80CCD(2):Employer contribution up to 10% of salary (14% for central govt) — no upper cap, over and above 80C.

At the 30% tax slab, your 80CCD(1B) benefit alone saves you up to Rs 50,000 × 30% = Rs 15,000 in tax each year. Lump sum withdrawal (up to 60% of corpus) at retirement is fully tax-free.