Tax
80CCD(1B)
pronounced: [8-0-C-C-D-(-1-B-)]
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Section 80CCD(1B) of the Income Tax Act provides an additional deduction of up to ₹50,000 per financial year for contributions made to the National Pension System or the Atal Pension Yojana by salaried and self-employed individuals.
This deduction is over and above the ₹1.5 lakh limit under Section 80C, meaning a taxpayer can claim up to ₹2 lakhs in total by combining 80C and 80CCD(1B). It is available only under the old tax regime and has a 14% lock-in until retirement.
Key Facts
| Fact | Value |
|---|---|
| Interest Rate | 14% p.a. |
| Maximum Limit | ₹50000 lakh |
| Tax Section | SECTION 80C |
Example
A 35-year-old contributing ₹10,000/month to NPS at 10% p.a. for 25 years accumulates ₹1.02 crore. At retirement, 60% (₹61.2 lakh) is tax-free; the remaining 40% must be used to buy an annuity, taxable as income.
Frequently Asked Questions
Last updated: 2 June 2026