Is Employer Contribution to NPS 80CCD(2) exempted under the new tax regime by default?

An employer's contribution to the National Pension Scheme (NPS) is deductible under Section 80CCD(2) when calculating an employee's total income. The deduction is capped at 14% of the salary for central government employees and 10% for all other employees.

Employer contributions to NPS automatically receive exemption in the new tax regime, meaning that exemptions apply under both the old and new regimes.

If included as part of the Flexible Benefits Plan (FBP) or deducted in payroll, you must configure appropriate settings to exempt it in both tax regimes.

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