The NPS tax benefit calculator computes your actual tax under both regimes for FY 2026-27, with and without NPS, so you see the rupees saved rather than a deduction amount. It handles 80CCD(1) inside the Rs. 1.5 lakh limit, the extra Rs. 50,000 under 80CCD(1B), and employer contribution under 80CCD(2).
NPS deductions in each regime
| Section | What | Old regime | New regime |
|---|---|---|---|
| 80CCD(1) | Your own contribution | Up to 10% of salary (20% of income if self-employed), within the Rs. 1.5 lakh 80C limit | Not allowed |
| 80CCD(1B) | Your own extra contribution | Additional Rs. 50,000 over 80C | Not allowed |
| 80CCD(2) | Employer contribution | Up to 14% (Govt) or 10% (others) of Basic + DA | Up to 14% of Basic + DA for all employers |
The overall limit for employer contributions to NPS, EPF and superannuation together is Rs. 7.5 lakh a year. Any excess is taxed as a perquisite. From 1 April 2026 the Income-tax Act, 2025 replaced the 1961 Act; the NPS benefits continue though section references are being renumbered.
Example: Rs. 15 lakh salary, Central Government employee
Gross salary Rs. 15 lakh, Basic + DA Rs. 7 lakh, own NPS Rs. 70,000, Government’s 14% share Rs. 98,000, other 80C Rs. 1 lakh, other deductions Rs. 50,000:
For most salaried people the new regime now wins, and the only NPS benefit that survives there is the employer’s 80CCD(2). That makes asking your employer to route part of your CTC into NPS the most valuable NPS tax move in 2026. Private employees can check this in the corporate NPS calculator.
Tax on NPS at withdrawal
- 60% of the corpus taken as lumpsum at exit: tax-free.
- Partial withdrawals up to 25% of own contribution: tax-free.
- Annuity (pension) income: taxable at slab rate.
- Amount used to buy the annuity: not taxed at purchase.
Read the full NPS tax benefits guide or compare total tax in the income tax calculator.
Frequently asked questions
Can I claim 80CCD(1B) in the new tax regime?
No. In the new regime, only the employer’s contribution under 80CCD(2) is deductible, up to 14% of Basic + DA.
What is the maximum NPS tax benefit?
In the old regime you can claim up to Rs. 2 lakh from your own contributions (Rs. 1.5 lakh in 80C including 80CCD(1), plus Rs. 50,000 under 80CCD(1B)), and the employer contribution on top.
Does NPS Tier 2 give tax benefit?
Only for Central Government employees who opt for the Tier 2 lock-in variant, under 80C. For others, Tier 2 has no deduction. See Tier 1 vs Tier 2.
Is NPS Vatsalya eligible for 80CCD(1B)?
Yes, a parent’s contribution to NPS Vatsalya can be claimed within the same Rs. 50,000 80CCD(1B) limit, only in the old regime.