{"id":882,"date":"2026-06-22T09:40:20","date_gmt":"2026-06-22T09:40:20","guid":{"rendered":"https:\/\/komplytek.com\/blogs\/?p=882"},"modified":"2026-06-22T09:40:20","modified_gmt":"2026-06-22T09:40:20","slug":"section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes","status":"publish","type":"post","link":"https:\/\/komplytek.com\/blogs\/section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes\/","title":{"rendered":"Section 124 of the Income-tax Act, 2025 \u2013 Deduction for NPS and Government-Notified Pension Schemes"},"content":{"rendered":"<body><h1 id=\"mcetoc_1jrna90tc0\"><\/h1>\n<p>Section 124 of the Income-tax Act, 2025 (effective from 1 April 2026) replaces the provisions that were earlier covered under Section 80CCD of the Income-tax Act, 1961. It provides tax deductions for both employer and employee contributions to notified pension schemes such as the National Pension System (NPS).<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/komplytek.com\/blogs\/section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes\/#%F0%9F%8F%A2_Employer_Contribution_Deduction\" >\ud83c\udfe2 Employer Contribution Deduction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/komplytek.com\/blogs\/section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes\/#%F0%9F%91%A4_Employees_Own_Contribution\" >\ud83d\udc64 Employee\u2019s Own Contribution<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/komplytek.com\/blogs\/section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes\/#%F0%9F%93%8C_Example_1_%E2%80%93_Private_Sector_Employee\" >\ud83d\udccc Example 1 \u2013 Private Sector Employee<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/komplytek.com\/blogs\/section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes\/#%F0%9F%93%8C_Example_2_%E2%80%93_Government_Employee\" >\ud83d\udccc Example 2 \u2013 Government Employee<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/komplytek.com\/blogs\/section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes\/#%F0%9F%91%B6_Contribution_to_Minors_NPS_Account\" >\ud83d\udc76 Contribution to Minor\u2019s NPS Account<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/komplytek.com\/blogs\/section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes\/#%E2%9A%A0%EF%B8%8F_Important_Conditions\" >\u26a0\ufe0f Important Conditions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/komplytek.com\/blogs\/section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes\/#%F0%9F%9A%80_Quick_Summary\" >\ud83d\ude80 Quick Summary<\/a><\/li><\/ul><\/nav><\/div>\n<h2 id=\"mcetoc_1jrna90tc1\"><span class=\"ez-toc-section\" id=\"%F0%9F%8F%A2_Employer_Contribution_Deduction\"><\/span><span style=\"color: #3366ff;\">\ud83c\udfe2 Employer Contribution Deduction<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>If your employer contributes to your NPS account, you can claim a deduction for the contribution made by the employer up to:<\/p>\n<table>\n<thead>\n<tr>\n<th>Employer Type<\/th>\n<th>Maximum Deduction<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Central Government \/ State Government<\/td>\n<td>14% of Salary<\/td>\n<\/tr>\n<tr>\n<td>Other Employers (Private Sector)<\/td>\n<td>10% of Salary<\/td>\n<\/tr>\n<tr>\n<td>Taxpayers opting for the new tax regime under Section 202(1)<\/td>\n<td>14% of Salary<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>\u201cSalary\u201d for this purpose includes Dearness Allowance (if it forms part of retirement benefits) but excludes other allowances and perquisites.<\/p>\n<h2 id=\"mcetoc_1jrna90tc2\"><span class=\"ez-toc-section\" id=\"%F0%9F%91%A4_Employees_Own_Contribution\"><\/span><span style=\"color: #3366ff;\">\ud83d\udc64 Employee\u2019s Own Contribution<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>An individual can claim a deduction of up to \u20b950,000 for contributions made to their own NPS account during the financial year. This deduction is over and above the deductions available under Section 123.<\/p>\n<h3 id=\"mcetoc_1jrna90tc3\"><span class=\"ez-toc-section\" id=\"%F0%9F%93%8C_Example_1_%E2%80%93_Private_Sector_Employee\"><\/span><span style=\"color: #3366ff;\">\ud83d\udccc Example 1 \u2013 Private Sector Employee<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Assume:<\/p>\n<p>\u2022 Basic Salary + DA = \u20b910,00,000<br>\n\u2022 Employer NPS Contribution = \u20b91,00,000 (10%)<br>\n\u2022 Employee NPS Contribution = \u20b950,000<\/p>\n<p>Deduction available:<\/p>\n<table>\n<thead>\n<tr>\n<th>Particulars<\/th>\n<th>Amount<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Employer Contribution Deduction<\/td>\n<td>\u20b91,00,000<\/td>\n<\/tr>\n<tr>\n<td>Employee Contribution Deduction<\/td>\n<td>\u20b950,000<\/td>\n<\/tr>\n<tr>\n<td>Total Deduction under Section 124<\/td>\n<td>\u20b91,50,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h3 id=\"mcetoc_1jrna90tc4\"><span class=\"ez-toc-section\" id=\"%F0%9F%93%8C_Example_2_%E2%80%93_Government_Employee\"><\/span><span style=\"color: #3366ff;\">\ud83d\udccc Example 2 \u2013 Government Employee<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Assume:<\/p>\n<p>\u2022 Salary = \u20b912,00,000<br>\n\u2022 Employer Contribution = 14% = \u20b91,68,000<br>\n\u2022 Employee Contribution = \u20b950,000<\/p>\n<p>Deduction available:<\/p>\n<table>\n<thead>\n<tr>\n<th>Particulars<\/th>\n<th>Amount<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Employer Contribution<\/td>\n<td>\u20b91,68,000<\/td>\n<\/tr>\n<tr>\n<td>Employee Contribution<\/td>\n<td>\u20b950,000<\/td>\n<\/tr>\n<tr>\n<td>Total Deduction<\/td>\n<td>\u20b92,18,000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 id=\"mcetoc_1jrna90tc5\"><span class=\"ez-toc-section\" id=\"%F0%9F%91%B6_Contribution_to_Minors_NPS_Account\"><\/span><span style=\"color: #3366ff;\">\ud83d\udc76 Contribution to Minor\u2019s NPS Account<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A parent or guardian contributing to a notified pension account of a minor can claim a deduction. However, the combined deduction for self-contribution and contribution to the minor\u2019s account cannot exceed \u20b950,000.<\/p>\n<h2 id=\"mcetoc_1jrna90tc6\"><span class=\"ez-toc-section\" id=\"%E2%9A%A0%EF%B8%8F_Important_Conditions\"><\/span><span style=\"color: #3366ff;\">\u26a0\ufe0f Important Conditions<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ol>\n<li>No double deduction is allowed. If an amount has already been claimed under Section 124, it cannot be claimed again under Section 123.<\/li>\n<li>Amounts used to purchase an annuity in the same tax year are not treated as received for taxation purposes.<\/li>\n<li>Special provisions have been introduced for the Unified Pension Scheme (UPS) and taxation of withdrawals on retirement or superannuation.<\/li>\n<\/ol>\n<h2 id=\"mcetoc_1jrna90tc7\"><span class=\"ez-toc-section\" id=\"%F0%9F%9A%80_Quick_Summary\"><\/span><span style=\"color: #3366ff;\">\ud83d\ude80 Quick Summary<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<table>\n<thead>\n<tr>\n<th>Benefit<\/th>\n<th>Deduction Limit<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Employer Contribution (Govt Employer)<\/td>\n<td>Up to 14% of Salary<\/td>\n<\/tr>\n<tr>\n<td>Employer Contribution (Private Employer)<\/td>\n<td>Up to 10% of Salary<\/td>\n<\/tr>\n<tr>\n<td>Employer Contribution (New Tax Regime under Section 202(1))<\/td>\n<td>Up to 14% of Salary<\/td>\n<\/tr>\n<tr>\n<td>Employee\u2019s Own Contribution<\/td>\n<td>Up to \u20b950,000<\/td>\n<\/tr>\n<tr>\n<td>Minor\u2019s Pension Account Contribution<\/td>\n<td>Included within \u20b950,000 limit<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/body>","protected":false},"excerpt":{"rendered":"<p>Section 124 of the Income-tax Act, 2025 (effective from 1 April 2026) replaces the provisions that were earlier covered under Section 80CCD of the Income-tax Act, 1961. It provides tax deductions for both employer and employee contributions to notified pension schemes such as the National Pension System (NPS). \ud83c\udfe2 Employer Contribution Deduction If your employer &#8230; <a title=\"Section 124 of the Income-tax Act, 2025 \u2013 Deduction for NPS and Government-Notified Pension Schemes\" class=\"read-more\" href=\"https:\/\/komplytek.com\/blogs\/section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes\/\" aria-label=\"Read more about Section 124 of the Income-tax Act, 2025 \u2013 Deduction for NPS and Government-Notified Pension Schemes\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":883,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,37,33],"tags":[],"class_list":["post-882","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global-consulting","category-gst","category-management-consulting-firm"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Section 124 of the Income-tax Act, 2025 \u2013 Deduction for NPS and Government-Notified Pension Schemes - Komplytek Blogs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/komplytek.com\/blogs\/section-124-of-the-income-tax-act-2025-deduction-for-nps-and-government-notified-pension-schemes\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Section 124 of the Income-tax Act, 2025 \u2013 Deduction for NPS and Government-Notified Pension Schemes - Komplytek Blogs\" \/>\n<meta property=\"og:description\" content=\"Section 124 of the Income-tax Act, 2025 (effective from 1 April 2026) replaces the provisions that were earlier covered under Section 80CCD of the Income-tax Act, 1961. 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