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NPS Tax Benefits NPS Rebate in New Tax Regime

Nov 11, 2022 Alankit

Would you like a relaxed life post-retirement without income stress? Then a retirement plan is just the right thing for you. A pension plan helps you build a retirement corpus and even offers tax advantages.

One such scheme is the National Pension Scheme (NPS), introduced by the Government of India. The scheme's benefits hope to provide post-retirement income for its subscribers. Let's look at the benefits the scheme offers and, more importantly, what all concessions come along as per the new tax regime.

The National Pension Scheme was introduced to encourage people to accumulate benefits once they retire.

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NPS Benefits

There are many benefits under the scheme; here are a few of them:

  • Returns: Part of the investments made under the scheme will be allocated to equities. These offer a higher interest rate than conventional financial products.
  • Flexibility: The program also allows the subscriber to benefit from a change of fund manager if they are not satisfied with the fund's performance. All you have to do to get this NPS benefit is fill out the form online or offline and make the payment for the fund manager change, and before you know it, it's done.
  • Risk: Currently, the maximum equity risk is about 75%. There is a 50% cap for government employees over 60. As soon as the investor is 50 years old, the equity component is reduced by 2.5% per year, reducing the risk arising from market volatility.

NPS Tax Benefits

NPS comes not only with retirement benefits but also incurs tax benefits as listed below:

  • You can claim tax benefits on your contribution and employer contribution to the National Pension Scheme under various sections of the Income Tax Act 1961. Government employees can apply for a tax exemption of up to Rs 1.5 lakh for contributions to the NPS Fund under Section 80CCD (1). The tax advantage is limited to 10 per cent for employees in the private sector.
  • In addition, employees may apply for an additional deduction of up to Rs 50,000 for contributions to the NPS under Section 80CCD (1b). Only those investing in NPS Tier 1 accounts can claim this additional Rs 50,000 deduction. There are no tax benefits available to investors in NPS Tier 2 funds. Therefore taxpayers can take advantage of up to one year of tax exemption when investing in NPS. Moreover, the above tax deductions are available if you pay income tax under the old tax regime.
  • Employees are now entitled to exemption from tax on employer contributions to the NPS under Section 80CCD(2) of the Income Tax Act. So now, employees of both central and state governments can claim a 14 per cent tax benefit on the NPS contributed by their employers. However, it should be noted that if the employer's contribution to the NPS, EPF, and Pension account exceeds Rs 7.5 lakh in any financial year, the employer's contribution to your employee's NPS account will be taxable.

Things to keep ready before opening the NPS account

  • A valid Mobile Number and Email ID.
  • Active Bank Account.
  • Scanned copy of photograph, signature, and Proof of Address in *.jpeg/*.jpg/* format having file size between 5KB – 80 KB each and file name should be as simple Photo.jpg, Sign.jpg, Permadd.jpg, and Corradd.jpg.
  • Scanned copy of PAN card as Proof of Identity and Cancelled Cheque in *.jpeg/*.jpg/* format having file size between 5KB - 80MB each and file name should be Idproff.jpg, Cheque.jpg.
  • Online payment of initial contribution (Minimum amount ? 500) through Internet Banking, UPI, Debit card, and Credit card.

How to Register into NPS with Alankit?

Alankit specialises in handling all your queries related to your investment and retirement. Our team of experts will surely guide you in opening and maintaining your NPS account.

Enrol into NPS with us by simply following these steps.

  • Go to
  • Click on 'Invest Now' to start your enrolment.
  • Fill in your 'Details'.
  • Choose your 'Investment Plan'.
  • Select your 'Fund Manager'.
  • Select the payment breakup details.
  • Mention your Residence Status & PAN details.
  • Verify your 'Mobile Number & Email Id' and 'Bank Details'.
  • Make the Payment.
  • Enter your 'Personal & Nominee Details.'
  • Upload your 'Documents' and click 'Submit' to complete.

You have now subscribed to NPS!

Why Alankit?

Alankit's expertise in the financial planning domain helps you open an NPS account but also provides you with a portal where you can make regular payments to your NPS account and guidance to hassle-free investment.

Happy NPS investing because we care for you!

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