Answer

1. F

   Facts

   The only deduction available in BOTH old and new tax regime. Employer contributes to your NPS on your behalf. You pay zero, and get a ₹45,000–₹1.05L annual deduction. The most underused tax saving move for salaried professionals.

2. P

   Provisions and law

   • Sec 124 (old 80CCD(2))
   • Sec 202 (old 115BAC)
   • Sec 80CCD(1B)
3. A

   Analysis

   How Sec 124, Income-tax Act 2025 (old Sec 80CCD(2)) works in practice: Your basic salary is ₹50,000/month. Employer contributes 14% of ₹50K = ₹7,000/month to your NPS. That ₹7,000 is NOT counted as your income. Annual NPS contribution by employer = ₹84,000. Deduction under Sec 124 (old Sec 80CCD(2)) = ₹84,000. Your in-hand salary is unchanged. But your taxable income falls by ₹84,000. Two-step benefit: Step 1, Lower taxable income now (immediate tax saving). Step 2, NPS corpus grows tax-free. At retirement: 60% lump sum withdrawal tax-free. 40% in annuity (taxable as salary in retirement, but typically at lower rate). New regime taxpayers especially benefit: In new regime, Sec 123, 126 (old Sec 80C, 80D), home loan interest are all gone. But Sec 124 (old Sec 80CCD(2)) REMAINS. For a new regime taxpayer at 30% bracket with basic salary ₹50K/month: ₹84,000 × 30% = ₹25,200 saved annually. Zero investment required from them.

4. C

   Conclusion

   1. 1Check if NPS account (PRAN) exists, if not, open via eNPS portal (enps.nsdl.com)
   2. 2Inform employer HR to activate NPS employer contribution (Form KYC to employer)
   3. 3Request CTC restructuring, move portion of special allowance to NPS employer contribution
   4. 4Confirm the contribution percentage: private sector max 14% of (basic + DA)
   5. 5Verify in payslip: NPS employer contribution line should appear (reduces gross taxable salary)
   6. 6Cross-check Form 130 (old Form 16) Part B: Sec 124 (old Sec 80CCD(2)) should appear as a deduction

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.