NPS Rules

NATIONAL PENSION SCHEME

Define contribution rules, eligibility gates, and tier-wise caps for your corporate NPS program.

NPS rules

👥 WHO USES THIS

▸Payroll admins defining NPS rules

▸Finance setting contribution caps

▸HR mapping eligible employees

✨ WHAT YOU'LL ACHIEVE

▸Set contribution caps per tier

▸Define eligibility gates

▸Apply rules consistently

Navigate to Tax and Statutory Compliances → Statutory Components → NPS Rules.
Click the Edit Icon.
Set the NPS deduction percentage for employees.
The auto-declaration and investment category are pre-defined in the system as per statutory compliance.
In the Old Tax Regime, employee contributions to NPS are eligible for tax deduction under Section 80CCD(1) (up to the prescribed limit) and Section 80CCD(1B) for an additional ₹50,000.
Employer contributions are eligible for deduction under Section 80CCD(2).
In the New Tax Regime, NPS deductions for both employee and employer are still allowed under Section 80CCD(2), but employee deduction benefits are limited.
During the payroll processing, the system will automatically deduct NPS based on the configured contribution rates for both employee and employer.
The amounts will appear separately in the payslip under Deductions(Employee) and Employer contribution.

Fig: NPS Rules

How to Set Up NPS Rules for Employee Payroll & Tax