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All-in-one HR platform · v2.0
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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
A voluntary, market-linked retirement scheme regulated by PFRDA, to which employees and employers can both contribute. The employer's contribution can be deducted by the employee under Section 80CCD(2) within a percentage of salary set in the Act, which is why some employers offer it as a component in the salary structure.
Not a substitute for EPF where EPF applies. Covered establishments must still contribute to EPF; NPS sits alongside it.
NPS work for payroll has two parts: onboarding employees who opt in under the corporate model, and remitting the monthly employer and employee contributions through the point of presence by the due date.
The employer contribution sits within the salary structure, and its tax treatment differs between the old and new regimes, with limits linked to basic plus DA as notified. Payroll reflects it in the TDS computation and shows it separately on the payslip.
Example: on a basic of ₹50,000, an employer contribution of 10% of basic is ₹5,000 a month. The usual mistake is adding NPS to the structure before collecting the employee's PRAN, which leaves contributions unallocated. Check the current deduction limits each year, since they have been revised before.
The employer's contribution to an employee's NPS account can be deducted under section 80CCD(2), within a percentage of salary set by law. This deduction is also allowed under the new regime.
Under the old regime it can be claimed under section 80CCD(1) within the 80C limit, plus an additional deduction under 80CCD(1B). Check the current limits each year.
Yes, through the corporate NPS model. The employer registers with a Point of Presence and remits contributions on behalf of employees.
No. EPF is a statutory scheme with a declared interest rate; NPS is a voluntary market-linked pension scheme with different withdrawal rules.
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