Two sections, two caps
| Section | What it covers | Cap | Regime |
|---|---|---|---|
| 80CCD(1B) | Your own NPS contribution, ₹50,000 of Chapter VI-A room beside 80C | ₹50,000 | Old only |
| 80CCD(2) | Employer's NPS contribution | 14% of basic+DA (new) / 10% (old) | Old and new |
80CCD(2) is the only NPS benefit the new regime keeps, and — at 14% of basic+DA — it is also larger there than the 10% old-regime cap. For a basic+DA of ₹12,00,000, the employer contribution alone can be ₹1,68,000 in the new regime against ₹1,20,000 in the old.
Worked example
| Input | Value | New regime | Old regime |
|---|---|---|---|
| Gross salary | ₹20,00,000 (basic+DA ₹12,00,000) | ₹1,67,440 | ₹2,74,560 |
| Deductions used | 80C ₹1,50,000; 80CCD(1B) ₹50,000; 80D ₹25,000; 80CCD(2) ₹1,20,000; 80E ₹1,00,000 | 80CCD(2) only | All of the above |
The ₹50,000 of 80CCD(1B) and the higher employer share are exactly why payroll conversations start with NPS: the extra ₹50,000 reduces old-regime slab income at the taxpayer’s marginal rate and can tip the regime comparison towards the old scheme in some cases — but only if the rest of the old-regime deductions are already there.
Frequently asked questions
How big is the NPS tax benefit under section 80CCD(1B)?
₹50,000 a year of additional NPS contribution, inside the old regime only. It does not eat into the ₹1,50,000 of section 80C.
Is the ₹50,000 available in the new regime?
No. Under section 115BAC the Section 80CCD(1B) extra deduction does not apply; the employer share under 80CCD(2) does.
What does section 80CCD(2) allow?
The NPS contribution made by your employer is deducted from salary income: 14% of basic salary plus dearness allowance in the new regime, and 10% in the old regime. It is the one NPS benefit both regimes keep.
Total employer-plus-employee NPS: what is the ceiling?
The employee's own contribution is 80CCD(1B) up to ₹50,000; the employer contribution is 80CCD(2) up to the stated percentage of basic+DA. This page and the calculator keep the two caps apart instead of collapsing them softly.
Is NPS money always locked in?
Whoever holds the account, funds stay in the NPS framework until retirement or specific exit rules — it is a retirement account with an annuity requirement rather than a conventional 80C product, which is why the lock-in consideration matters more than for ELSS.