Ritesh Sabharwal CFP®

W.M.W #4: You Forgot to Update Your NPS Limit? Didn't you?

Reading time: 4 minutes - July 12, 2025

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Hey Reader

If you’ve recently switched to the new tax regime, you might be missing out on one of the simplest ways to save more on taxes. Many people forget to review the rules when their tax regime changes—and that could mean leaving lakhs on the table.

My friend found out only after stumbling onto a Reddit thread about the 14% limit in the new regime. He had to double-check and triple-check.

And I confirmed to him, Yes—it’s real, it’s official, and it could make a huge difference to your retirement savings and tax planning.

Today’s email breaks it down for you. Here’s what you’ll learn:

• What most people misunderstand about Corporate NPS
• The difference in limits between old and new tax regimes
• Why this matters now (and what you should do)

If you’re earning ₹20–50L+ annually, this is one of the easiest tweaks with a big payoff.

3 Things To Know To Save More Tax With Corporate NPS

To stop losing money to taxes, you need to rethink how you use your company’s NPS benefit.

Let’s dig in.

1. Corporate NPS ≠ Individual NPS

Most people have an NPS account and invest under Section 80CCD(1B) to claim the ₹50,000 extra deduction—that’s your personal NPS. But Corporate NPS is different: your employer can contribute a percentage of your salary directly, and this falls under Section 80CCD(2) with its own limits.

• Old Tax Regime: Employer can contribute up to 10% of Basic + DA, tax-free.
• New Tax Regime: The limit jumps to 14%.

That’s a 40% increase in what you can shield from tax, without any extra effort

2. Most Companies Haven’t Updated This Limit

Here’s the catch: your employer won’t automatically increase the contribution, even if you’ve opted for the new regime. You have to do it yourself.

Go to your intranet and financials portal and update your limit manually.

Now let's take an example to understand this better👇

Here is the NPS corpus & pension calculation👇

Do you want to calculate your NPS pension? Then just go to this calculator on the NPS Trust's website:

(https://npstrust.org.in/nps-calculator#)

3. One of the Few Big Tax-Saving Tools Left

The new tax regime removed most classic tax-saving sections—no 80C, no HRA, no home loan deduction. But this—Corporate NPS under 80CCD(2)—remains

With the 14% limit, it’s now one of the only meaningful tax reduction option left. You can:

• Lower your taxable income
• Build retirement savings
• Get employer contribution (free money)
• Keep it all tax-free (within limits)

And guess what it's also about forced discipline that helps you keep the money invested till you are 60.

Investing is a lot more about psychology and discipline rather than the actual investment options we choose.

Here’s what you learned today:

• Corporate NPS limits differ by tax regime—10% in old, 14% in new
• Most companies don’t automatically update your contribution
• If you’re in the new regime, this is one of the best remaining tax tools

What You Should Do Next:

✅ Check your payslip or payroll portal today.

✅ If you’re in the new tax regime, increase your Corporate NPS contribution to 14% of your basic salary.

Remember: In New regime, the total employer contributions to EPF, National Pension System (NPS), and superannuation funds are tax-exempt up to ₹7.5 lakh per annum.

Sneak Peek👇

Next week I will tell you about “Minimum due on credit cards? Don’t fall for it.”

So stay tuned!!

Connect with me on LinkedIn, I write everyday to make you make smarter money decisions👇

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