Section 80CCD(1B) is a tax deduction reserved specifically for your own contribution to the National Pension System, and it’s genuinely additional: it sits on top of Section 80C rather than competing with it for the same room.

How it works

You can deduct up to ₹50,000 for your own NPS contribution under 80CCD(1B), over and above the ₹1.5 lakh ceiling under Section 80C (which itself can include an NPS contribution under 80CCD(1), just capped inside that combined 80C limit). Used together, that’s up to ₹2,00,000 in deductions from NPS and other 80C investments combined. The catch: 80CCD(1B) is available only in the old tax regime. If you’ve moved to the new regime, this specific deduction isn’t available to you.

Don’t confuse it with your employer’s NPS contribution

Section 80CCD(2), a different subsection entirely, covers your employer’s NPS contribution on your behalf, and that one is available in both tax regimes: up to 10% of basic plus DA in the old regime, or 14% in the new regime, for private-sector employees (government employees get 14% either way). It’s easy to mix these two up since they’re both NPS-related and both start with 80CCD, but one is your own voluntary contribution with a hard ₹50,000 cap and old-regime-only availability, and the other is your employer’s contribution with a percentage-based cap available under either regime.

Where it sits in the Income-tax Act, 2025

From tax year 2026-27 the NPS deductions are gathered in Section 124 of the new Act. Your own contribution, the extra ₹50,000 and the employer’s contribution all move there, and the limits and regime rules described above are unchanged. People will keep saying 80CCD(1B) for years, but payroll software and the current year’s declaration form use the new reference.

Frequently asked questions

Can I claim 80CCD(1B) under the new tax regime?

No. It’s an old-regime-only deduction. The new regime allows the employer’s NPS contribution under 80CCD(2), but not your own voluntary contribution under 80CCD(1B).

Does the ₹50,000 count toward the ₹1.5 lakh Section 80C limit?

No, that’s the point of the subsection. It’s a genuinely separate ₹50,000 allowance, not a carve-out from your existing 80C room.

Can I split one NPS contribution across both 80CCD(1) and 80CCD(1B)?

Yes. A common approach is to first fill the 80C room (up to ₹1.5 lakh across all 80C investments, NPS included) and then direct further NPS contribution specifically into the ₹50,000 80CCD(1B) bucket.

See the employer side of NPS contributions with the NPS Employer Contribution Calculator, and check the overall tax impact with the Income Tax Calculator.