Question 1

What is the extra NPS deduction under Section 80CCD(1B)?

Accepted Answer

Section 80CCD(1B) allows an additional deduction of up to ₹50,000 for NPS contributions, over and above the ₹1.5 lakh limit under Section 80C. This exclusive deduction is available to both salaried and self-employed individuals under the Old Tax Regime.

Question 2

Is 80CCD(2) employer NPS contribution allowed in New Tax Regime?

Accepted Answer

Yes. Employer NPS contributions under Section 80CCD(2) are deductible up to 10% of basic salary even under the New Tax Regime. This makes NPS particularly valuable for salaried employees regardless of which tax regime they choose.

Question 3

How is NPS corpus calculated?

Accepted Answer

NPS corpus = Annual contribution × ((1 + r)^n – 1) / r, where r is the expected annual return rate and n is the number of years to retirement. By law, 40% of the corpus must be used to buy an annuity; the remaining 60% can be withdrawn tax-free.

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