What is the NPS tax benefit?

🔐Investments

NPS Calculator

Retirement corpus + ₹50K extra deduction under 80CCD(1B)

Monthly Contribution₹10,000

Employee Tier I contribution

Years to Retirement25 yrs

NPS matures at 60. Partial exit allowed after 3yr for specific purposes.

Asset Allocation

Equity (E)50%

Active choice: max 75% till 50yr, then auto-reduces. LC50/LC75 lifecycle.

Corporate Bonds (C)30%

Government Securities (G)20%

Total allocation100%

Expected Returns by Asset Class

Equity Return12%

Corporate Bond Return9%

Govt Securities Return7.5%

Annuity Rate6.5%

Annuity provider offers ~6–7% depending on options chosen

At Retirement (Age 60)

Annuity Allocation %40%

Minimum 40% must be used for annuity purchase. Max 100%.

Income Tax Slab

Employer Contribution 80CCD(2)

Employer Annual NPS₹0

Private sector: up to 10% of basic salary. Govt: 14%.

NPS Corpus Growth — 25 Years

Blended return: 10.20% p.a. (50% E + 30% C + 20% G)

Retirement Payout Breakdown

Total corpus at 60

₹1.37 Cr

Lump sum (60% — tax-free up to 60%)

Up to 60% of corpus is fully tax-free on withdrawal

₹82.38 L

Tax on excess lump sum

Only if lump sum > 60% of corpus; taxed at 30%

Nil

Net lump sum in hand

₹82.38 L

Annuity corpus (40%)

Invested with PFRDA-empanelled annuity provider

₹54.92 L

Monthly pension (at 6.5%)

Pension is taxable as income in hands of pensioner

₹29,747

Tax Deductions Available

80CCD(1) — within 80C limit

Own contribution up to ₹1.5L (within 80C)

₹1.20 L

80CCD(1B) — additional deduction

Extra ₹50,000 over and above 80C limit

₹0

80CCD(2) — employer contribution

Up to 10% of basic (private) / 14% (govt). No upper cap.

₹0

Total NPS deduction

₹1.20 L

Annual tax saving (30% slab)

₹36,000

NPS Rules & Tips

→ 80CCD(1B) is the most underused deduction — ₹50,000 EXTRA over 80C limit. At 30% slab, saves ₹15,600/year.

→ Tier I: locked till 60 (partial exit after 3yr for education, illness, housing). Tier II: fully liquid, no tax benefit.

→ Annuity is taxable as income. Choose joint-life annuity to protect spouse after your death.

→ At 60: can defer withdrawal up to 70. 100% annuity gives higher pension; 60% lump sum option is tax-free.

→ Auto-choice (LC50/LC75/LC25): equity reduces automatically as you age — good if you can't monitor allocation.

Open your NPS account and lock in ₹50K extra deduction.

NPS TrustGovt. backed

Open Tier I NPS online in 10 minutes. Save up to ₹1L in taxes.

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Zerodha CoinNPS via Zerodha

Open NPS directly from your Zerodha account. Active choice available.

Open via Zerodha

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FAQ

NPS Calculator — FAQ

Common questions about this calculator

1 questions

80CCD(1B) allows ₹50,000 extra deduction over the ₹1.5L 80C limit — only under Old Regime.

Calculations are approximate and for educational purposes only. Excludes surcharge for income above ₹50L. Consult a Chartered Accountant for personalised tax advice.