NPS Tax Benefits: The Secret ₹50,000 Deduction Under 80CCD(1B)
The National Pension System (NPS) is the most tax-efficient retirement vehicle in India. Learn how to save an extra ₹15,600 in taxes every year.
Beyond Section 80C
Most taxpayers easily exhaust the ₹1.5 Lakh limit under Section 80C through EPF, ELSS, and Life Insurance. But many miss out on an exclusive, additional tax deduction available only through the National Pension System (NPS).
Section 80CCD(1B)
Under Section 80CCD(1B), you can claim an additional deduction of up to ₹50,000 for contributions made to your Tier 1 NPS account. If you are in the 30% tax bracket, this single investment saves you ₹15,600 in pure tax outgo every single year.
The Ultimate Retirement Tool
Not only does NPS save tax today, but it also allows you to invest up to 75% of your corpus in low-cost Equity index funds. This ensures your retirement corpus beats inflation. At age 60, you can withdraw 60% of the corpus entirely tax-free, while the remaining 40% must be used to purchase a regular pension annuity.
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