{"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 [&hellip;]<\/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 v28.0 - 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, 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