Glossary term

NPS

Government-backed retirement scheme with equity exposure and an extra ₹50,000 deduction under 80CCD(1B).

The National Pension System (NPS) is a voluntary retirement savings scheme regulated by PFRDA. Contributions are invested in a mix of equity, government bonds and corporate bonds, with up to 75% equity allowed for Tier-1.

NPS Tier-1 is locked until age 60. At maturity, at least 40% of the corpus must buy an annuity (taxable income). The big draw is the extra ₹50,000 deduction under 80CCD(1B) — the highest-tax-benefit-per-rupee deduction in the Old Regime.