National Pension Scheme is a good option for saving as well as tax benefit sources. A tax exemption of Rs.1.5 lakh can be claimed on the employee’s and employer’s contribution towards the National Pension System (NPS). However, employees can get an additional tax benefit of Rs 50000 for self contribution in NPS. Tax benefits can be claimed under Section 80CCD(1), 80CCD(2), and 80CCD(1B) of the Income Tax Act. Following is a brief description of all these sections:

• 80CCD(1), This section is a part of Sec 80C. It covers self-contribution in NPS made by the employee. Salaried employees can claim a maximum deduction of 10% of their salary, while self-employed individuals can claim up to 20% of their gross income.
• 80CCD(2), is also a part of Section 80C. It includes the employer’s contribution towards NPS. This benefit cannot be claimed by self-employed individuals. The maximum amount that an individual is eligible for deduction is either the employer’s NPS contribution or 10% of basic salary plus Dearness Allowance (DA) whichever is higher.
• 80CCD(1B), under this section, individuals can claim an additional tax benefit up to Rs.50,000 for any other self-contributions as NPS tax benefit.

Therefore, individuals can claim up to Rs.2 lakh as tax benefits under NPS.