A separate additional deduction for investment in the National Pension System (NPS) was introduced in FY16, allowing taxpayers investing up to Rs 50,000 in their NPS Tier I account to claim an additional deduction under Section 80CCD (1B) of the Income-tax Act. This deduction is unique to NPS, as other investment avenues qualify for deductions under Section 80C alone and cannot avail of the Rs 50,000 extra benefit. However, financial planners believe that the amount allowed as deduction under NPS should be increased to further encourage retirement savings.
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