NPS Calculator
Key Takeaway
NPS offers an additional ₹50,000 tax deduction under Section 80CCD(1B) beyond the ₹1.5 lakh 80C limit. At retirement, 60% can be withdrawn tax-free while 40% must purchase an annuity.
2,27,93,253
1,36,75,952
60% withdrawn at age 6045,587
Paid monthly post age 60NPS Retirement Corpus Build Projections
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NPS Wealth Accumulation
NPS returns depend on your asset allocation (Equity, Corporate Debt, Government Bonds) and compound monthly over your working years until age 60.
Worked Example: ₹10,000/month in NPS
- Total Investment: ₹36,00,000
- Estimated Corpus at Age 60: **₹2.27 Crores**
At age 60, you can withdraw a maximum of 60% as a tax-free lump sum (**₹1.36 Crores**). The remaining 40% (**₹91 Lakhs**) MUST be used to purchase an annuity to provide a monthly pension.
NPS: The Retirement Plan That Gives You an Extra Tax Deduction Most People Miss
Most people know NPS (National Pension System) as the government employee retirement scheme. What many private sector employees don't know is that NPS offers a unique additional tax deduction that stacks on top of your regular 80C limit , and most Indians are leaving it on the table.
Section 80CCD(1B) allows an additional ₹50,000 deduction for NPS contributions, over and above the ₹1.5 lakh 80C limit. For someone in the 30% tax bracket, this saves ₹15,600 per year (₹50,000 × 31.2%). Over 20 years of tax savings invested back into NPS, that ₹15,600/year itself compounds into a significant corpus.
NPS also offers equity exposure (up to 75% in the E tier under Auto/Active choice), which helps it outperform traditional pension plans significantly over long horizons. On maturity at age 60, 60% of the corpus can be withdrawn tax-free as a lump sum; the remaining 40% is compulsorily annuitised.
The main limitation is the mandatory annuity requirement and the illiquidity. NPS is a long-term, disciplined retirement vehicle , not a flexible savings account. Best used in combination with equity mutual funds for your non-retirement wealth goals.
Frequently Asked Questions
What is the extra tax benefit of NPS?
NPS offers an additional ₹50,000 deduction under Section 80CCD(1B), over and above the ₹1.5 Lakh limit of Section 80C. This is available under both Old and New tax regimes.
Can I withdraw from NPS before 60?
Partial withdrawal (up to 25% of your own contributions) is allowed after 3 years for specific reasons like medical emergencies, education, or home purchase. Premature exit requires 80% to be used for annuity purchase.
How much pension will I get from NPS?
At retirement, you must use at least 40% of your NPS corpus to buy an annuity (pension). The remaining 60% can be withdrawn lump sum (tax-free). The monthly pension depends on the annuity rate at the time.
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