NPS Contribution through Credit Cards – Everything you need to Know

By | October 8, 2020
NPS contribution through credit cards
NPS contribution through credit cards

What is NPS ?

I personally don’t use it but I googled a bit to get you an idea.

The National Pension System (NPS) is a social security initiative by the Central Government. Its a sort of pension scheme with decent 8-10% annualised returns, not guaranteed and works more like a mutual fund that’s linked to market performance.

It comes with two tiers and here’s what I know:

  • Tier 1: This is the actual NPS a/c meant for tax benefits but also comes with a lock-in period and exit (withdrawal) rules. Bit complicated than those FD with tax benefits and so you get slightly higher returns on it.
  • Tier 2: Its more like an open-ended mutual fund without any exit rules and there is no tax benefit on it either. You need to have Tier 1 a/c to open a Tier 2 ac.

So as you see Tier 1 is what once should ideally invest in if one plans for a long term.

But for those who want to invest for a short term Tier 2 is what comes handy.

Credit Cards for NPS payments

Now comes the juicy part!

NPS payment system allows you to invest through credit cards among other payment options. Technically one is not allowed to use a loan product (like credit cards) for investment purpose of any sort.

But well, government decided to allow it as it will encourage more people to opt for it. Good move by the digitally inclined government (nope, no political views!).

NPS Payment Gateway Charges

Payment ModeCharges
Credit Card0.90% + 18% GST (1.062%)
Debit Card0.80% + 18% GST (0.944%)
Net BankingINR 0.60 + 18% GST

So if you intend to invest using credit card, you may do so by paying the above ~1% transaction fee, which in my opinion is very attractive.

This works pretty good when you hold a credit card with 2% or above rewards. If you’re interested in knowing those credit cards check out the premium & super premium credit cards lis for 2020.

High Value NPS Payments

While we’re allowed to pay NPS payments without a limit as such, it doesn’t mean we can spend in millions and get away with reward points. 

Well, actually you can do that if your income is that high!

But the problem comes only when people start to misuse the system by investing, withdrawing & then re-investing the same amount again in a short period to gain rewards.

That’s called manufactured spend in the dictionary of credit card maximisers.

Banks actions

Recently many credit card issuers, especially Amex & HDFC started taking various actions on accounts with such suspicious activity of high value NPS spends. Here’s what we know so far:

  • American Express: Looking at the reports from multiple readers it seems Amex started blocking cards and closing few accounts altogether. Some do get warnings, requesting for more details about such transactions.
  • HDFC Bank: HDFC is usually known for debiting points on high value transactions and its nothing new when it comes to NPS issue. So in NPS case too HDFC debited points on many such risky accounts and some got temporary/permanent account block too.

Other banks could also be doing it, or maybe they will do it going forward. 

Overall I see the actions taken by banks are directly proportional to the volume one dealt with. If they see someone spending ~1Cr like this, the impact could be severe like account block compared to someone who spent 1L in a year.

Why banks do it?

Partly a business move, partly a legal move!

Manufactured spend is a grey area but the same also falls under money laundering, which is illegal stuff.

Bank’s are supposed to take actions to prevent these activities as they have to abide by the anti-money laundering act and this is one of the ways to prevent it.

Moreover, if many do it in large numbers in long run it also generates fake numbers on consumer spend behaviour and overall affects the entire cards ecosystem.

However, if you ask “Is it fair for banks to do this?

Nope! Bank’s risk team will be very much aware of such activities in advance. So its unfair to let cardholders play and block them later.

Rather, it would be better if banks have a flagging system that warns users in realtime when they pass a certain spend limit instead of letting them transact and catch them all at once.

FAQ’s

I used my credit card for NPS payment, is my a/c at risk?

As long as you didn’t game the system, you have nothing to worry. If you have used the system for small amount to reach the milestones, it maybe OKAY, but high value transactions will be under the radar.

What can I do if the credit card issuer debited points or closed the ac?

As this is usually done as a bulk activity, you might fall into the net even if you don’t game the system, esp. if your transactions are high. 

In such cases, you may appeal/escalate to respective credit card issuer with the documents. Your ac may get re-instated if the bank is fine with the appeal. It may vary from case to case based on previous spend history, etc.

Final thoughts 

Manufactured spend opportunities show up every now and then but its important to remember that all those will eventually lead to a trap if too many users try to take advantage of it, especially with high value transactions.

So not only NPS, even if you come across other opportunities in future to earn points via manufactured spend its better not to play too much with it.

That aside, if you intend to really invest in NPS Tier-II for a decent period of time for its returns, you may do so with your credit card and continue to get the rewards. Even if your intentions are good, its safer to use multiple cards if you intend to invest relatively high amount.

Have you been affected recently due to NPS payments? Feel free to share your experiences in the comments below.

P.S. God’s maybe watching, so feel free to use your Dog’s name if you intend to dwelve into details.

78 thoughts on “NPS Contribution through Credit Cards – Everything you need to Know

  1. Shivi

    “Its a sort of pension scheme with decent 8-10% annualised returns.” – The returns are not guaranteed, Sid. They are linked to market performance and ratio of your money invested in one of the 5 underlying schemes.

    Reply
    1. Siddharth Post author

      I’ve updated it with more clarity. Thank you, Shivi.

      Reply
  2. Pluto

    This is the Highlight of the article “Good move by the digitally inclined government (nope, no political views!)”

    Using my dogs name. Maybe this thread will give dog name ideas for future pet owners 😛

    Reply
  3. Satish Kumar Agarwal

    NPS doesn’t come under section 80C of IT deduction. So it gives tax benefits over and above 80C and that’s why so popular.

    So, it is not fair to compare it with FDs which comes under section 80C.

    Also only 50K IT benefit is available to an individual under tier 1. So even if one invests more than 50K benefit is limited to that extent only. And bank’s should not have problem with this much amount.

    Am investing 50K via cc every year since last 3 years and didn’t have any problem so far.

    Reply
    1. Siddharth Post author

      Got it.

      Would be interested to know more, like whats the section for NPS then for employed & self-employed?

      Reply
          1. Chandrasekhar Adusumalli

            If you really want to go for nps, ask your employer to deduct nps (only some employers provide this) of 10% of your (basic+dearness allowance) every month from your salary before crediting. This will save you very good amount of tax also. Dearness allowance is only for govt employees. So for private emoloyees, if employer contributes 10 percent salary to nps, it will save tax corresponding to that much.

      1. Shivi

        @ Sid – This is more for income tax saving related purpose but for knowledge, here it is:

        Firstly, As per Section 80CCE, the aggregate amount of deduction under sections 80C, 80CCC and Section 80CCD(1) cannot exceed Rs.1. 5 lakh.

        Secondly, the deduction allowed under section 80 CCD(1B) is an additional deduction in respect of any amount paid in the NPS up to Rs. 50,000.

        Thirdly, the contribution made by the central government or any other employer i.e. private employer to a pension scheme under section 80CCD(2) shall be excluded from the limit of Rs.1.5 lakh.

        Therefore, taking together Section 80CCD(1) and Section 80CCD(1B), one may invest a maximum of Rs 2 lakh in NPS. In addition, a salaried individual can save more tax if his or her employer contributes towards the employee’s NPS account.

        All in all – ELSS and/or PPF and/or NSC and/or Life Insurance and/or other basic tax saving instruments limit is 1,50,000 per year. On top of that 150k, APY and/or NPS (Tier 1 ONLY) qualifies for additional tax deduction of up to 50, 000 per year. So total savings can be 2,00,000 per year.

        Reply
          1. GTMAX

            There is no absolute upper capping for contributions under section 80CCD(2). Limited to 10% of basic salary without any absolute value cap.

            Tax Benefits under the Corporate Sector:

            Corporate Subscriber:
            Additional Tax Benefit is available to Subscribers under Corporate Sector, u/s 80CCD (2) of Income Tax Act. Employer’s NPS contribution (for the benefit of employee) up to 10% of salary (Basic + DA), is deductible from taxable income, without any monetary limit.

            Corporates
            Employer’s Contribution towards NPS up to 10% of salary (Basic + DA) can be deducted as ‘Business Expense’ from their Profit & Loss Account.

      2. Sumit Sharma

        Hi,

        NPS comes under 80C of the IT Act. Teir 1 as well as Tier 2 ( Lock in for 3 years) qualify for deduction u/s. 80C. Further, it is not limited to 50k, one can invest 2 Lakh in NPS and get the deduction of the same amount. The main part is, that you can not invest in tier 2 account without having tier one account and you can pay through Credit card only for your contribution in tier 2 account.

        Reply
        1. rahul

          tier 2 does not qualify for any tax deductions or any deductions at all. it is more of like mutual fund investment with very very very low management charges. usually MFs charge almost 1% as annual maintenance charge, NPS charges hardly anything.

          Reply
        2. Jay

          Contribution to Tier-1 account can also be made through credit card.

          Reply
      3. Rahil Shah

        Sid and Satish,

        All NPS Tier I contributions are eligible for deduction u/s 80C of the Income Tax Act, 1961. However, the limit stands at the overall 1.50 lacs u/s 80C. The 50k is an additional deduction eligible u/s 80CCD(1B) of the Act. So basically you can claim 2 lacs in a financial year as a deduction by investing in Tier I. Doesn’t matter whether you are employed or self-employed.

        In fact, if your employer also contributes to your NPS account, you can claim an additional 10% of your (basic salary + DA) as a deduction.

        Many invest only 50k, as the remaining 1.50 lacs is already taken care by way EPF, PPF, ELSS, etc. But technically, up to 2 lacs is eligible for claim of deduction.

        Trust the above helps.

        Thanks!

        Reply
    2. rahul

      wrong info. NPS contribution can indeed be claimed out section 80C and it has an added advantage of plus 50,000.

      Reply
    3. Umang

      NPS is covered under section 80C for upto 1.5l and additional 50K under section 80ccd bringing the total tax free income to be upto 2l.

      Reply
  4. Satish Kumar Agarwal

    NPS comes under IT section 80CCD (1B). So it provides, additional benefits of upto 15450/- (30% plus 3% cess), if you fall in 30% tax slab. So it’s a no brainer that way.

    Reply
  5. Captain Bishuddha Bharatiya

    IndusInd has also blocked credit cards for high spends on NPS.

    Reply
    1. Goofey

      Can you elaborate on how high spends? I have done up to 2 Lakhs without a problem

      Reply
  6. Dhruv Soni

    As a matter of fact, talking about NPS, there are two sections where you can save tax

    1. 80CCD(1) : Under this you can invest upto Rs. 50k per year for tax deduction.
    2. 80CCD(2B) : This is the cream, under this, you can ask your employer to contribute upto 10% of your basic income towards NPS each month just as EPF, and you get complete tax deduction on this WITH NO MONETARY CAP. This is extremely important for high earners(sure, a lot of them here :p). So say if you have an annual basic salary of 12L, thus a monthly basic of 1L, you can ask your employer to deposit 10k each month towards your NPS and thus you can save 1.2L income tax deduction over.

    Both the above sections are over and above 80C, thus, in this case you can save 1.7L over and above all other sections.

    Reply
    1. Siddharth Post author

      Wonderful, thanks for that info.

      Could you also share more on the exit (withdrawal) rules as I see some % needs to be re-invested elsewhere on withdrawal. That info would be equally valuable.

      Reply
      1. Satish Kumar Agarwal

        Following are the conditions of Conditional Partial Withdrawal:

        Subscriber should be in NPS atleast for 3 years
        Withdrawal amount will not exceed 25% of the contributions made by the Subscriber
        Withdrawal can happen maximum of three times during the entire tenure of subscription.
        Withdrawal is allowed only against the specified reasons, for example;
        Higher education of children
        Marriage of children
        For the purchase/construction of residential house (in specified conditions)
        For treatment of Critical illnesses.

        However do check rules at the time of withdrawal, because NPS rules have been changed very frequently in past.

        Please note, premature exit rules are different than this.

        Reply
      2. Dhruv Soni

        Hi Siddharth,

        Edits for the previous comments, the sections are actually 80CCD(1B) and 80CCD(2) and I confirm 80CCD(2) has no monetary ceiling. I have taken deduction for both the sections in the past 2 years over and above 80C.

        I believe the only withdrawal options we have before the age of 60 is for marriage (self and kids’), higher education (self and kids’) and in case of buying a home which is the same what we have in EPF.

        If we have more exit options, would love to know.

        Reply
  7. Daigunder

    nps will give extra 50k apart from 1.5lakh and also been from hdfc bank risk i have noticed and flagged many cards for this. many people use this for rotation of funds

    Reply
  8. Vikash Singh

    Contribution to NPS Tier I qualify for tax deduction under Section 80C up to Rs 1.5 lakh.
    Tax deduction is available under Section 80CCD (1B) up to Rs 50,000 in addition to Section 80C benefits.

    Only Government employees are eligible for income tax benefits* under NPS Tier II scheme. Private sector employees contributions to the NPS tier-II account will continue to remain free from lock-in but will not get tax deductions.

    *The central government employee’s contribution towards Tier-II of NPS for availing income tax deduction under Section 80C (up to ₹1.5 lakh) per year will have a lock-in period of 3 years.

    Reply
  9. Arun C B

    Hi Sid,

    Good article. I am also using NPS for last 3 years and being a long term Investment I chose to pay with CC as the 1+% extra payment will be paid of later. And yeah I pay 50k only as of now. And this will help in milestones a bit :-).

    NPS is E-E-E (ish) scheme like PPF. At maturity you have to invest 60% of money at the end to an annuity scheme and 40% can be taken as a whole. 60% will be Tax exempt (E-E-E) and 40% will be taxable. And the bad thing is the monthly income from annuity will be taxed (!!). As of now this is a complicated product in terms of maturity , though I expect this will be cleared as time passes by.

    * Feel free to correct if anything is wrong.

    Reply
    1. Siddharth Post author

      Thanks Arun. More details on annuity scheme would be useful as well.

      Reply
    2. Arun C B

      Annuity schems that provided by insurance companies take a lumpsum and provide that to you in equal installments. Like LIC jeevan shanthi, you may choose payout monthly/quarterly/annually. Like the pension of our parents this will give you monthly income.

      Reply
    3. Money

      @Arun C B – Budget 2019 proposed to make lump sum withdrawal of 60 per cent from NPS totally tax free at the time of maturity and hence now onwards upto 60% lumpsum withdrawl amount at maturity is tax-free. The remaining 40% is also tax free but one has to compulsorily invest in an Annuity scheme and the returns from the annuity are taxed as income as per slab rates

      Reply
  10. VK

    I have been used my credit card to pay NPS amount of 50K every year. NPS is a fantastic investment since you straight away save 30% of the max amount of 50 K investment per year (which is 15K) as tax exemption. Please note that although you can invest more than 50K per year, the max tax benefits is only upto 50K investment per year. I would strongly suggest to enrol in NPS.

    In the comments above, I read that the returns are stock market driven. This is not entirely correct since the amount you invest in NPS is divided between Equity and Debt fund. I have got very good returns in NPS (approximately 12%).

    Please note that when paying by CC for NPS, one cannot use Diners card as it is not supported.

    Reply
    1. Shivi

      @ VK: Till Mar 31, 2020 my returns from NPS were -40% over the past 3 years. Ofc i was choosing high equity option but that’s what i meant that its’ returns are market driven (world stock market crash of March 23-25, 2020) and not like guaranteed returns of a Fixed Deposit.

      Reply
        1. Roshan

          NPS is day 1 40%+ return in case you are in 30% slab.
          Not using 80ccd(1) .. you will get 35k in hand after decution of 15k tax.
          If you invest in nps 50k, it’s actually your 35k and 15k saved in tax.. so your 35k becomes 50k at Day1. 15k/35k is 40+% return in day one.

          Reply
        2. FrequentFlyer15

          He meant minus 40%. Mine isnt that low but its in minus since the market was on a bull till Feb and then crashed.

          Reply
          1. Shivi

            @ Roshan – As others rightly pointed out, i meant minus 40% all thanks to the market crash. It has since then come up to reflect positive gains of double digit but my point is you cannot depend solely on NPS for your retirement ( as with all stock market linked investments) as the returns are not guaranteed.

            I am really intrigued by your calculations though!

        3. Shikhar Makkar

          It is minus 40%. Seems like you interpreted – as ~ 🙂

          Reply
      1. rahul

        it can give you fixed deposit like returns as well if you choose to invest in active option with 100% in debt. it totally depends from person to person. but NPS can work as a long term Fd as well as aggressive equity fund. choices remain in your hands.

        Reply
        1. rahul

          it actually works even better than fd since you dont have to pay tax annually of your deposited amount and at the end of tenure about 60% of corpus is tax free, which might become 100% over the period of time in next 15-20 years , government willing.

          Reply
    2. Nikhil

      I used my DCB card to pay for 50K tier 1 account in June this year only, Did they stop accepting DCB for NPS after that? Remember there are 2 payment gateways, One of them accepts diners & other does not!

      Reply
  11. Ghanshyam

    DCB is not accepted for NPS payment…too bad. Is there any other way to pay using DCB?

    Reply
    1. Murali

      Diners supported for NPS Payment. Select BillDesk gateway and it allows. While entering few digits of DCB number, it shows not supported but after entering complete DCB card number, transaction will go through. I used DCB in last month for NPS payment.

      Reply
    2. FrequentFlyer15

      There are 2 payment gateways on NPS, one Is BillDesk and the other is SBI Epay. Under BillDesk also, there is another Amex EzeClick gateway. I have paid for NPS using my Club Miles in the past using of the payment gateways. So, you can check by using both gateways to see which one accepts Diners Club. But I am 99.99% sure it accepts Diners.

      Reply
    3. Ghanshyam

      Thanks for the update, it does indeed accept DCB now, when I checked in Apr-2020, it wasn’t accepted.

      Reply
  12. Kiran

    NPS tier I is basically only for central government employees where employee contributes 10% of his basic and DA the equal amount of contributions will be matched by the government and they would invest based on your portfolio you choose.

    At the age of retirement they would payback the money that you had contributed during your employment years( though this part still government themselves r not clear about) reason being this was introduced from the year 2005 so not many would b retired who got recruited in 2005 onwards.

    So I don’t think any individual can open an account with tier I.

    Cheers,
    Kiran

    Reply
    1. Ravi arya

      Individual can also open Tier I account @ NPS. The individual would be classified differently than organization and hence there is no need of contribution from employer. While for government employee NPS is more or less mandatory, for others its just another avenue of investment for retirement and saving tax over and above 80C.Also, in Tier I your amount is locked vs. in Tier II, withdrawal is flexible means you can withdraw anytime.

      Reply
      1. Roshan

        @Shivi .. NPS is same as MF as you get closer to retirement need to rebalance fund towards bonds from equity. Till now it is working for me. Last 5 years 50k every year. Valuation at present is 3L. 50k return in 5 years. It comes approx 7 percentage yearly return.
        If you add my 40% day one return, it will be much higher. As actual investment is 35k every year (15k tax saved not added here) for five year is 175000 only.

        Reply
        1. Shivi

          For me NPS is “invest & forget”. I’ll see what’s to be done with it close to year 60 or how much i am getting out of it.

          Reply
    2. rahul

      your assumption are all wrong. anyone can open teir 1 account , sitting in the comfort of their home, only thing required is aadhaar card, mobile to receive otp and cheque photograph. it hardly takes 10 minutes to open an NPs account. anyone with tier 1 can open teir 2 account. so in short any one who is not a minor and has an aadhaar card can open Nps account and make contributions from the comfort of their homes and have tax deductions and retirement planning at the same time.

      Reply
  13. Nitin Gupta

    This is a very good option for tax saving I am investing in NPS from last 2 years. This year due to less funds I paid 50k on 28 th March to save tax and since then my money have grow around 60 percent due to market correction becuase I have chosen aggressive option where 75 percent is put into equity funds. That time I did not check the reward points earned now after reading your article I checked and got around 5000 regalia reward point due to some offer at that time that covers more than my cost😀😀😀.

    Now thinking of opening a tier-2 account and investing 50k-1lac during market drop from credit card and paying back after withdraw in 50 days. Great article Siddharth.

    Also request to revisit and refresh your article for best cards for 2020 and make some updates.

    Reply
  14. Vicky

    can we do around 2lac per annum in tier 2 withiur risk of cancellation of cards for hdfc or amex?

    Reply
  15. Niten

    Hi,
    My doubt is more towards nps and not credit card.
    How to migrate CRA from Karvy individual to NSDL corporate ?
    I am not able to find the process from last 1 month.
    Thanks

    Reply
    1. Ravi arya

      If you want to migrate from individual to corporate then I guess you need to inform your organization to do so. I have earlier moved from organization to Individual, for this purpose I went to one of the POP-SP branch and submitted a physical application. Hope this helps…..

      Reply
  16. Bandar Singh

    Why should it get categorised as money laundering if the government is permitting payments through credit cards? If CC payment is allowed, then who are the banks to decide how much we spend so long as we are paying off our dues. Also, more or less most card issuers don’t get the full 1.5% or whatever merchant transaction fees. Part of it goes to the payment gateway among other things. If users are ready to have their limits blocked and pay 1% interest, which is pretty much higher than personal loan interest, then why not?

    Reply
    1. Siddharth Post author

      Not really categorised so, but its an attempt to prevent it.

      Reply
  17. Viswanath

    Some factual incorrectness observed. Say, a credit cards give 2 reward points for every 100 rupee spent. Reurn is shown as 2℅. However generally a reward point is worth 25 ps. Hence breakeven should be more than 4 points for Rs. 100/- spent for the paymet, which very few cards give. Some points are misleading. Please correct.

    Reply
    1. Siddharth Post author

      Welcome to Cardexpert!

      Its time for you to go through the review articles.

      Reply
  18. Vishal Anam

    You mentioned, technically one is not allowed to use a loan product (like credit cards) for investment purpose of any sort, so wanted to share that I have been running and SIP with Safegold for digital gold investment with a credit card and it has been working fine for me since last 3 months.
    Amex is not allowed, but I use Amazon ICICI card to even 1% cashback which has been promptly paid each month.

    Reply
    1. Shivi

      Gold is fine. That’s allowed.
      Credit card issuers prohibit use of card for stock market related purchases. That’s gambling (Tier 2 of NPS)

      Reply
      1. Vishal Anam

        Digital gold is an investment avenue, and does have it own set of fluctuations. Also, no one outside safegold allows this.

        Reply
        1. Shivi

          What i meant was – Gold, digital or physical, in coins or jewellery can be bought using credit card. There is no restriction on it like there is on buying stocks/Crypto C#rrency/Ca$ino ch!ps etc. with card.

          Reply
      2. Gaurav Khurana

        Not entirely true. You can use credit cards for paying ULIP premium which can be completely stock market driven

        Reply
        1. Shivi

          Sigh…..It’s not stocks… you cannot buy pure stocks with credit card.

          Reply
    2. HM

      For this Digital Gold investment via Credit Card, what are the Payment Gateway charges ?
      Does Safegold charge extra for CC payments or same as Netbanking & Debit Cards ?
      Also, any difference in charges between Lumpsum v/s SIP payments ?

      Reply
      1. Vishal Anam

        No additional charges when purchased via credit card.

        Also price remains same for SIP vs Lumpsum

        Reply
    3. GShan

      Will HDFC DCB card give 3.3% reward on this transaction? If not, any other card providing more than 1% back.

      Reply
  19. Bunty

    Hi,

    I am using credit card to make rent payment using Redgirraffe. Is there any possibility that rent payment too could be red flagged or they don’t give point on it.

    Also one more question that is off-topic:

    Near the end of my billing cycle, I made a high value transaction (say 1 lac) on Amazon. Post that credit card bill got generated. Now due to some issue, I have to return the product. How do I deal with this situation as the credit card issuing bank expects full payment and doesn’t consider reversed transaction as payment.

    Reply
  20. Neelam

    Is there any way we can buy mutual funds or pay mutual fund sip using credit card.

    Reply
  21. Satish Kumar Agarwal

    My NPS ac XIRR (annual rate of return) is 11.95 for last FY and overall also in the same range (11-12%) since last 3 years. Have opted for scheme G, which invests in Government bonds and securities.

    These are not completely safe n their returns vary as per interest rate fluctuations. If interest rate falls during a fy, you get more returns for that period and vice-versa. But they are relatively safe from stock market gyrations.

    Reply
  22. Vaibhav Saboo

    Have seen some outdated comments about tax savings for NPS. So here is my attempt to summarise them:

    Under Section 80C: 1.5 lakhs is exempt. That is across all types of investments. As example, if you are also contributing to your PF ( be it EPF or PPF or both; and the former one is mostly present) or have insurance, tax exempt NPS will not be 1.5 lakhs but the balance. Also, it will be limited to your 10% of Basic+D.A.
    Under Section 80CCD (1B): 50k allowed over and above the rest of Section 80C
    Under Section 80CCD(2): Employer’s contribution, where the employer can contribute upto 10% of your Basic+DA each year.

    You need to watch out for the last one. Have seen people saying there is no limit, which is INCORRECT after the last union budget. As per the revised IT rules, the cumulative employer’s contribution to EPF, Super Annuation and NPS combined upto 7.5 lakhs is tax exempt. Post that amount, the same is taxable as per your income tax slabs. Further, any income, dividend, etc during the year on the accumulated (and carried over) employer’s contribution will also be counted towards this 7.5 lakh limit. So the E-E-E benefit may no longer apply (fully), once you have got sufficient holdings in the above stated schemes

    You can check out the same by just searching on Google “7.5 lakh NPS”.

    Reply

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