NPS tax benefits: How salaried, self-employed can claim tax deductions for NPS under old, new income tax regime

economictimes.indiatimes.com:

NPS are available under both new and old income tax regimes. If you are wondering how to avail of tax deductions for your NPS investment, read here.

What are the tax deductions that you claim for investing in NPS?

You can claim tax deductions against NPS under three sections of the Income-tax Act, 1961 in India: Sections 80CCD (1), 80CCD (1B), and 80CCD (2). Here is a look at each one of them.

NPS tax benefits under Section 80CCD (1):

Section 80CCD (1) of the Income-tax Act, 1961, allows for a deduction from your gross total income for contributions made to the NPS. Both salaried and self-employed taxpayers can avail of the deduction under section 80CCD(1) for investments in NPS. The maximum deduction under this section is — 10% of your salary (Basic + DA) for salaried individuals or 20% of gross total income for self-employed, subject to a ceiling of Rs 1.5 lakh in a financial year. Do remember that this limit is within the overall ceiling of Rs 1.5 lakh under Section 80 CCE. The aggregate amount of deductions under section 80C, section 80CCC and section 80CCD should not exceed Rs 1.5 lakh.

NPS tax benefits under Section 80CCD (1B):

Section 80CCD (1B) offers an additional deduction of up to Rs 50,000 for contributions to NPS. This is over and above the limit of Rs 1.5 lakh available under Section 80CCD (1), providing a potential tax-saving opportunity for both salaried and self-employed taxpayers.

NPS tax benefits under Section 80CCD (2):

Section 80CCD (2) pertains to the employer's contribution to an employee's NPS account. So, it is available only for the salaried taxpayers. «The amount of deduction cannot exceed 14% of the salary in the case of Central Government employees and 10% in the case of any other