NPS at maturity: 60% corpus can be withdrawn tax-free. 40% minimum must be used to buy annuity for monthly pension. This calculator models both components.
NPS Calculator — All Your Questions Answered
What is NPS and how does it work?+
The National Pension Scheme (NPS) is a voluntary, long-term retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). You contribute monthly to a pension account (Tier 1), which is invested across equity (up to 75%), corporate bonds, and government securities based on your chosen allocation. At age 60, you can withdraw 60% as a tax-free lumpsum and must use the remaining 40% to purchase an annuity for monthly pension income.
What are NPS tax benefits?+
NPS offers triple tax benefits: (1) Section 80C: ₹1.5 lakh deduction on employee contributions. (2) Section 80CCD(1B): Additional ₹50,000 deduction exclusive to NPS (over and above 80C limit). (3) Section 80CCD(2): Employer contributions up to 10% of salary are tax-free (14% for government employees). At maturity, 60% withdrawal is completely tax-free. The 40% annuity income is taxed as regular income. NPS is one of the most tax-efficient retirement instruments in India.
What returns can I expect from NPS?+
NPS returns depend on your asset allocation. With 75% equity allocation (maximum allowed), historical NPS equity fund returns have been 10–12% p.a. over 10+ years. A balanced 50% equity, 50% debt allocation typically returns 8–10% p.a. Conservative portfolios (25% equity) return 7–9% p.a. The default Auto Choice (Life Cycle Fund) gradually reduces equity as you age — starting at 75% equity at age 18 and reducing to 15% at age 55.
NPS vs PPF vs ELSS — which is best for retirement?+
Each serves a different purpose: NPS gives the highest extra tax benefit (₹50,000 via 80CCD(1B)) and equity growth potential but locks money till 60. PPF is completely tax-free (EEE) — contributions, interest, and maturity — but returns are fixed at 7.1% p.a. currently. ELSS gives 80C deduction with only 3-year lock-in and equity-level returns (12–15%). Ideal strategy: max out ELSS (₹1.5L in 80C) + add ₹50,000 to NPS for the extra deduction + EPF through employer. This maximises tax savings and growth.
Can I withdraw from NPS before 60?+
Partial withdrawal from NPS Tier 1 is allowed after 3 years for specific purposes: higher education, marriage of children, home purchase, or critical illness treatment. You can withdraw up to 25% of your own contributions. Premature exit before 60 (after 10 years) requires 80% of corpus to go into annuity and only 20% can be withdrawn. NPS Tier 2 is a flexible, voluntary account with no lock-in — but Tier 2 contributions don't get tax benefits (except for government employees).