NPS Calculator

NPS (National Pension System) is a government-backed voluntary retirement savings scheme regulated by PFRDA. You contribute monthly during your working years and receive a pension after retirement. It offers market-linked returns and significant tax benefits.

NPS offers three tax deductions: (1) 80CCD(1) — up to 10% of salary (or 20% for self-employed), within the ₹1.5L 80C limit; (2) 80CCD(1B) — additional ₹50,000 over and above 80C; (3) 80CCD(2) — employer's contribution up to 14% of salary (government employees) or 10% (others) is deductible.

60% of the NPS corpus can be withdrawn as a tax-free lump sum at retirement (age 60). The remaining 40% must be used to purchase an annuity (pension plan). The annuity income is taxable as per your income slab.

Tier 1 (pension account): minimum ₹500 per contribution and ₹1,000 per year. There's no maximum limit. For Tier 2 (voluntary savings): minimum ₹250 per contribution.

An annuity is a pension plan you buy with at least 40% of your NPS corpus at retirement. The annuity provider (LIC, SBI Life, etc.) pays you a fixed monthly pension for life. The annuity rate (typically 5–7%) determines your monthly payout.

PPF is fully tax-free (EEE) but limited to ₹1.5L/year with a fixed 7.1% return. NPS offers higher potential returns (market-linked, typically 10–12% for aggressive allocation), an extra ₹50,000 deduction under 80CCD(1B), and suits those wanting a pension. PPF is better for risk-averse investors; NPS is better for higher income earners wanting maximum tax savings.