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CTCPlanner

NPS calculator and tax benefits

NPS is the only retirement instrument that still carries a tax benefit under the new regime — through your employer's contribution. Understanding which of its three deductions applies to you is worth more than the fund choice.

Project my NPS corpus

What it means

Section 80CCD(1) covers your own contribution inside the ₹1.5 lakh 80C umbrella. Section 80CCD(1B) adds a separate ₹50,000, old regime only. Section 80CCD(2) covers your employer's contribution — up to 14% of salary in the new regime and 10% in the old — and is available in both.

The formula

Deduction = 80C share + ₹50,000 (80CCD(1B)) + employer contribution (80CCD(2))

Employer NPS is the efficient lever: it is deductible in both regimes, sits outside the ₹1.5 lakh umbrella, and can often be carved out of existing CTC without extra cost to you — subject to the ₹7.5 lakh aggregate ceiling across PF, NPS and superannuation.

Worked example

  • ₹50,000 of self-contribution under 80CCD(1B) saves ₹15,600 at a 31.2% marginal rate.
  • Employer NPS at 10% of a ₹8,00,000 basic adds ₹80,000 of deduction in either regime.
  • Projected at the configured rate, those contributions compound into a substantial retirement corpus.

How to use it

  1. 1Claim the ₹50,000 first. 80CCD(1B) is separate from 80C — old regime only.
  2. 2Ask about employer NPS. It works in the new regime too, unlike almost everything else.
  3. 3Project the corpus. The retirement planner compounds both contributions with salary growth.

Frequently asked questions

Is NPS deductible in the new tax regime?

Employer contributions under Section 80CCD(2) are, up to 14% of salary. Your own contributions under 80CCD(1) and 80CCD(1B) are not.

Is the ₹50,000 NPS deduction over and above 80C?

Yes. Section 80CCD(1B) is a separate ceiling, so it stacks on top of the ₹1,50,000 umbrella in the old regime.

Is NPS taxable on withdrawal?

A portion of the corpus must be annuitised and that annuity is taxable as income; the lump-sum withdrawal is exempt within prescribed limits. Treat NPS as a retirement vehicle, not a short-term tax play.

Related tools & guides

Calculations on this site are based on official government provisions and should be verified against the latest government publications (incometax.gov.in).