NPS Account Holders Rejoice! New Tax Regime Unlocks Hidden Tax Benefit – Here’s How to Claim It

Ganpat Singh Chouhan

If you’re an NPS (National Pension System) investor and believe that the New Tax Regime offers no perks for your pension planning, think again! A smart switch in your NPS setup could bring significant tax savings — and it requires no extra investment or paperwork on your part.

NPS + New Tax Regime = Secret Tax Saver

In the New Tax Regime, most traditional deductions like Section 80C, HRA, and standard deductions are not applicable. But Section 80CCD(2) — which covers employer contributions to NPS — remains fully valid, making it a hidden jackpot for salaried individuals.

Tesla Begins Hiring in India Following Modi-Musk Meeting, Signals Expansion Plans

📅 1 year ago

How It Works: Employer Contribution is Key

If your NPS account is under the Corporate/Employer Model, any contribution made by your employer on your behalf is exempt from tax, up to:

14% of basic salary + DA for government employees
10% of basic salary + DA for private sector employees

This contribution reduces your taxable income directly — a powerful and often overlooked benefit in the New Regime.

Real-Life Example: See the Tax Impact

Let’s say your basic salary is ₹9.6 lakh/year, and your employer contributes 14% to NPS:

Vida V2 Electric Scooters Get Benefits of Up to ₹30,000: Limited Time Offer

📅 11 months ago

₹9,60,000 × 14% = ₹1,34,400
Your taxable income = ₹12,00,000 − ₹1,34,400 = ₹10,65,600

That’s ₹1.34 lakh income exempted from tax under the New Regime — no forms, no documents, no manual claim required. It’s automatically factored in by your HR/payroll team.

How to Activate Corporate NPS

Follow these simple steps to switch from Individual to Corporate NPS model:

Login to your NPS CRA account (via NSDL or KFintech)
Go to “Update Details” → “Change of Sector”
Select “Corporate Sector” as your new option
Enter your Employer’s EPS code (ask HR for this)
Submit request and wait 7–10 BUSINESS days for approval

Once approved, your employer can start contributing directly, unlocking tax benefits automatically.

Why It’s Even More Valuable in the New Tax Regime

In the Old Tax Regime, individuals can claim:

₹1.5 lakh under 80C
₹50,000 under 80CCD(1B) (voluntary NPS contribution)

But under the New Regime, those deductions are not allowed — making 80CCD(2) the only NPS-related deduction available, and a crucial tool for tax planning.

MG Windsor EV Pro Launches Today with 52.9 kWh Battery, Premium Features, and Level 2 ADAS

📅 10 months ago

Key Takeaways

Employer NPS contributions are tax-free under 80CCD(2) — even in the New Tax Regime
Switch to Corporate NPS model to claim the benefit
Saves you up to ₹1.5 lakh in taxable income annually
Works automatically once your HR is registered with CRA

So, if you’re looking for smart tax savings without changing your lifestyle, this NPS trick is a must in the New Tax Regime.

Author Profile

Ganpat Singh Chouhan: My name is Ganpat Singh Choughan. I am an experienced content writer with 7 years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.