Section 80CCD — NPS Employee, Employer & Additional Deductions
80CCD(1) up to ₹1.5L within 80C cap; 80CCD(1B) additional ₹50k over and above 80C; 80CCD(2) employer contribution up to 10% salary (14% for central government) — deductible in both old and new regime.
- 80CCD(1): employee — within ₹1.5L 80C cap (old regime)
- 80CCD(1B): additional ₹50k — old regime only
- 80CCD(2): employer — 10% of salary (14% central govt), both regimes
- Tier-1 NPS mandatory for 80CCD benefit; Tier-2 not eligible
- Partial withdrawal 25% tax-free; annuity from NPS taxable at slab
Definition
Section 80CCD
What is Section 80CCD?
80CCD(1) up to ₹1.5L within 80C cap; 80CCD(1B) additional ₹50k over and above 80C; 80CCD(2) employer contribution up to 10% salary (14% for central government) — deductible in both old and new regime.
Key rules to remember
- 80CCD(1): employee — within ₹1.5L 80C cap (old regime)
- 80CCD(1B): additional ₹50k — old regime only
- 80CCD(2): employer — 10% of salary (14% central govt), both regimes
- Tier-1 NPS mandatory for 80CCD benefit; Tier-2 not eligible
- Partial withdrawal 25% tax-free; annuity from NPS taxable at slab
Worked example
A Gurugram employee with ₹15L salary: employer NPS ₹1.5L (10% of salary) → 80CCD(2) ₹1.5L fully deductible in new regime; additional ₹50k self-contribution → 80CCD(1B) old regime only.
Which ITR form applies
- ITR-1 (Sahaj) — Up to ₹50 lakh total income
- ITR-2 — No upper limit
- ITR-3 — No upper limit
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Frequently asked questions
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- Which ITR Form Should You File in 2025? Complete Guide (ITR-1 to ITR-4)
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- Which ITR Form Should You File in 2026? (ITR-1 to ITR-7 Explained)
- The Ultimate Income Tax Deductions Guide AY 2026-27 — Complete Tax Saving Handbook
- 10 Tax-Saving Investments Under Section 80C — Ranked by Return
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People also ask
Are 80C/80D deductions available in the new regime?+
Most Chapter VI-A deductions (80C, 80D, 80E, HRA, LTA) are NOT available in the new regime. Only NPS employer contribution and standard deduction survive.
via Income Tax Calculator FY 2025-26Do I get an extra tax deduction?+
Yes — ₹50,000 additional deduction under Section 80CCD(1B), over and above ₹1.5L in 80C.
via NPS CalculatorHow much does the employer contribute to EPF?+
12% of Basic+DA, of which 8.33% goes to EPS (pension, capped) and 3.67% to EPF.
via EPF CalculatorIs NPS lumpsum tax-free?+
Yes — up to 60% withdrawal at maturity is tax-free. The remaining 40% must buy an annuity; pension income is then taxed at slab.
via NPS Calculator