Definition
Section 80CCD(1B) (NPS)
Section 80CCD(1B) gives an additional tax deduction for self-contributions to the National Pension System, over and above the Section 80C limit, under the old regime.
Section 80CCD(1B) allows an extra deduction for your own contribution to the NPS, separate from and in addition to the overall Section 80C ceiling, encouraging retirement saving. It is available under the old tax regime.
This is distinct from the employer's NPS contribution deduction (under 80CCD(2)), which is available even in the new regime. Together, NPS offers multiple tax-incentive layers for retirement.
For old-regime taxpayers who have exhausted 80C, this additional NPS deduction is a popular way to reduce taxable income further while building a long-term, market-linked pension corpus.
Related terms
- Section 80CSection 80C allows a deduction from taxable income for specified investments and expenses, such as EPF, PPF, ELSS, life insurance premiums and home-loan principal, under the old regime.
- Old vs New Tax RegimeIndia offers two personal income-tax regimes: the old one with various deductions and exemptions, and the new one with lower slab rates but most exemptions removed.
- NPS (Employer Contribution)The National Pension System allows an employer to contribute to an employee's retirement account, with that contribution eligible for an additional tax deduction within limits.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.