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NPS Tax Benefits Under Section 80CCD

Complete guide to National Pension System tax benefits under Section 80CCD for individuals and employers.

GetYourCA Team
15 January 2026·Updated 15 January 20261 min read12.5K views
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What is NPS?#

The National Pension System (NPS) is a retirement savings scheme with tax benefits under Section 80CCD.

Tax Benefits#

Employee Contribution (80CCD)#

  • Deduction up to ₹50,000
  • Over and above 80C limit

Employer Contribution (80CCD)#

  • Up to 14% of salary (basic + DA)
  • Tax-free in employee's hands

How to Claim#

  1. Open NPS Tier I account
  2. Contribute during financial year
  3. Get PRAN
  4. Claim in ITR

Withdrawal Rules#

  • 60% tax-free at maturity
  • 40% must buy annuity
  • Premature withdrawal allowed after 3 years with conditions

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Disclaimer

We have taken utmost care to research and write this article for your information. However, tax laws are complex and subject to frequent changes. This article is for general guidance only and should not be considered professional advice. Individual circumstances vary significantly — what works for one person may not apply to another.

Before making any tax-related decisions, we strongly recommend consulting with a qualified Chartered Accountant or tax professional who can assess your specific situation. We do not accept any liability for decisions made based on this information.

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