Definition
Section 80CCD(2) Employer NPS
Section 80CCD(2) allows a deduction for the employer's contribution to your NPS account, available even under the new tax regime.
Section 80CCD(2) covers the contribution your employer makes to your NPS account, deductible up to a percentage of your salary (basic plus DA). It is over and above the Section 80C limit and the 80CCD(1B) self-contribution benefit.
Uniquely among major deductions, 80CCD(2) is available under both the old and new tax regimes, and the new regime even allows a slightly higher percentage of salary. This makes employer NPS one of the few tax breaks salaried employees can use in the new regime.
If your employer offers an NPS contribution, opting in can meaningfully cut tax while building retirement savings. Discuss restructuring your CTC to include it if it is not already part of your package.
Related terms
- Section 80CCD(1B)Section 80CCD(1B) provides an additional tax deduction for voluntary contributions to the NPS, over and above the Section 80C limit.
- 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 (National Pension System)The National Pension System is a government-backed, market-linked retirement scheme regulated by PFRDA that builds a corpus over your working life and converts part of it into a pension.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.