Is the NPS maturity amount tax-free?

60% of the corpus withdrawn at 60 is exempt under Section 10(12A). The remaining 40% must buy an annuity whose pension is taxable as income each year.

What annuity rate should I assume?

Current immediate-annuity rates from the empanelled insurers are about 5.5–7% depending on the option (return of purchase price lowers the rate). The calculator defaults to 6%.

Can I withdraw from NPS before 60?

Partial withdrawals up to 25% of own contributions are allowed three times for specified reasons after three years. Full premature exit after five years allows only 20% as lump sum.

What return does NPS give?

Equity schemes have returned 10–13% over ten years and government bond schemes 8–9%; the blended return depends on your allocation. The calculator lets you set the assumption.

NPS Calculator

Corpus at 60, the tax-free lump sum and the monthly pension from your National Pension System contributions.

Switch tool

Your current age

Monthly contribution (₹)

₹

Annual step-up

Expected return (% p.a.)

Corpus used for annuity (min 40%)

Annuity rate (% p.a.)

At retirement

Years to 60

Total invested

₹ 0

Growth

₹ 0

Corpus at 60

₹ 0

Tax-free lump sumup to 60% of corpus

₹ 0

Annuity purchase

₹ 0

Monthly pensiontaxable as income

₹ 0

Indicative only. Returns are assumed constant; actual NPS returns depend on the equity/debt allocation and fund manager. Annuity rates vary by provider and option. Pension is taxable; the lump sum is exempt under Section 10(12A).

How it works

Compound monthly

Each contribution grows at the chosen return until you turn 60; the optional step-up raises the contribution every year.

Split at exit

At least 40% buys an annuity from a PFRDA-registered insurer. Up to 60% is withdrawn tax-free.

Pension

The annuity pays the chosen rate on the purchase price for life, monthly, taxable in your hands.

The three NPS tax breaks

NPS is the only instrument with a deduction on top of 80C. Your own contribution counts under 80CCD(1) within the ₹1.5 lakh 80C limit; a further ₹50,000 is deductible under 80CCD(1B); and the employer's contribution up to 10% of basic (14% for government employees, and 14% for all under the new regime) is deductible under 80CCD(2), which is the one deduction that survives in the new regime. At 60, 60% of the corpus is tax-free; the annuity is taxed as pension income each year.

80CCD(2) in the new regime

Employer NPS contribution up to 14% of basic + DA is deductible even under the new regime, making it the main salary-structuring lever left.

Allocation

Active choice allows up to 75% equity until 50, tapering after. Auto choice shifts to debt with age.

Exit before 60

Premature exit after 5 years allows only 20% lump sum; 80% must go to annuity, unless the corpus is below ₹2.5 lakh.

Small corpus

If the corpus at 60 is ₹5 lakh or less, the whole amount can be withdrawn without buying an annuity.