NPS Calculator (FY 2026-27)
Project your NPS retirement corpus, the tax-free lump sum, and the monthly pension your annuity will pay — plus the ₹50,000 exclusive deduction you unlock under Section 80CCD(1B).
Enter your NPS contribution plan
📊 Show full breakup (corpus, pension, tax saved)
| Item | Amount |
|---|---|
| Total invested over — years | — |
| Total returns (corpus − invested) | — |
| Corpus at retirement | — |
| Lump sum withdrawn (60%) | — |
| Annuity corpus (40%) | — |
| Monthly pension @ 6% annuity rate | — |
| Annual pension | — |
| Annual tax saved during accumulation (80CCD(1B), 30% slab) | — |
Lump sum is tax-free under Section 10(12A). Monthly pension is taxable at your slab. 80CCD(1B) gives an exclusive ₹50,000 deduction over and above the ₹1.5L 80C ceiling.
How NPS actually compounds your money
The National Pension System is a market-linked retirement vehicle regulated by PFRDA. You contribute monthly into Tier I; the money is invested across equity (E), corporate bonds (C), government securities (G) and alternatives (A). At age 60, you withdraw up to 60% as a tax-free lump sum and convert at least 40% into an annuity that pays a monthly pension for life.
FV = P × [((1 + r/12)^(n × 12) − 1) / (r/12)]
P = monthly contribution
r = expected annual return (decimal)
n = years to retirement
The three tax breaks people confuse
80CCD(1) covers your own contribution up to 10% of salary, but it sits inside the overall ₹1.5L 80C ceiling — so it competes with EPF, ELSS, PPF, life insurance premiums.
80CCD(1B) is the headline NPS deduction — an exclusive ₹50,000 over and above 80C, available only for NPS Tier I. ₹4,167/month = ₹50,000/year and you pocket the full ₹15,000 tax saving at the 30% slab.
80CCD(2) covers your employer’s NPS contribution up to 10% of basic + DA (14% for central govt) — fully deductible, doesn’t touch the ₹1.5L cap, and is the only NPS benefit that survives the new tax regime. If your employer offers it, take it.
Why monthly pension feels lower than the corpus suggests
Annuity providers in India typically guarantee 5-7% per year on the corpus you buy with. So a ₹1 crore annuity corpus at a 6% rate pays only ₹50,000/month — and that pension is taxable at your slab. The lump sum, however, is fully tax-free. This is why most people choose the minimum 40% annuity and take the maximum 60% lump sum.
The math on a real example
Salaried investor, age 30, contributing ₹5,000/month till age 60 — 30 years at 10% expected return:
- Total invested: ₹5,000 × 12 × 30 = ₹18 lakh
- Corpus at 60: ~₹1.13 crore (monthly compounding)
- Total returns: ~₹95 lakh — over 5x the invested amount
- Lump sum (60%, tax-free): ~₹68 lakh
- Annuity corpus (40%): ~₹45 lakh → monthly pension at 6% annuity rate ≈ ₹22,500/month
- Tax saved during accumulation: ₹50,000 × 30% = ₹15,000/year × 30 years = ₹4.5 lakh
This is the power of a 30-year compounding window with disciplined monthly inflow. Cut it to 20 years (start at 40 instead of 30) and the corpus drops to roughly ₹38 lakh — a one-third start delay roughly thirds the corpus. NPS’s punishing equity-glide rules make late starts hurt even more.
Active vs Auto Choice — pick once, then forget
Active Choice lets you set the equity allocation up to 75% (till age 50, then it tapers). Auto Choice runs three lifecycle funds: Aggressive (LC75 — 75% equity start), Moderate (LC50), Conservative (LC25), each gliding down with age. For most investors with a 25+ year horizon, Auto Choice Aggressive (LC75) is the closest equivalent to a ‘set-and-forget’ equity fund — and competes hard with retail equity mutual funds because NPS expense ratio is among the lowest in the world (under 0.10% vs 1-2% in mutual funds).
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Get the free book →Frequently asked questions
What is NPS?
NPS (National Pension System) is a voluntary retirement savings scheme regulated by PFRDA. You contribute regularly during your working years; the corpus is invested across equity, corporate bonds, govt securities and alternatives. At 60, you withdraw up to 60% as a tax-free lump sum and use ≥40% to buy an annuity. Tier I is the actual retirement account with lock-in; Tier II is a flexible withdrawal account.
What is the lock-in for NPS?
Tier I locks till age 60. Partial withdrawals (up to 25% of own contributions) are allowed after 3 years for specific reasons — children’s higher education, marriage, home purchase, medical emergency, or critical illness — capped at 3 such withdrawals total. Premature exit before 60 forces 80% into annuity and only 20% as lump sum.
What is the 60% lump sum and 40% annuity rule?
At retirement (age 60), at least 40% of the corpus must be used to buy an annuity. Up to 60% can be withdrawn as a tax-free lump sum under Section 10(12A). If your total corpus is ≤ ₹5 lakh, you can withdraw 100% as lump sum with no annuity requirement. The annuity-purchased portion is not taxed at purchase, but the monthly pension it pays is taxable at slab.
Tier I vs Tier II — which one should I open?
Tier I is the retirement account — locked till 60, gets the 80CCD(1) ₹1.5L deduction and the exclusive 80CCD(1B) ₹50K deduction. This is the one that matters. Tier II has no lock-in, no tax benefit (except for govt employees with 3-yr lock-in), and works like a low-cost mutual fund. Most investors only need Tier I.
Difference between 80CCD(1), 80CCD(1B) and 80CCD(2)?
80CCD(1): own contribution up to 10% of salary, sits inside ₹1.5L 80C ceiling. 80CCD(1B): exclusive ₹50,000 over and above 80C — NPS-only, the highest-leverage tax break. 80CCD(2): employer’s contribution up to 10% of basic+DA (14% for central govt) — fully deductible, NOT inside ₹1.5L, and STILL allowed in the new tax regime.
How is NPS withdrawal taxed?
Lump sum (up to 60% of corpus) at age 60 is fully tax-free under Sec 10(12A). The annuity-purchased portion is not taxed at purchase; the monthly pension you receive is taxable at slab as ‘income from other sources’. Partial withdrawals during accumulation (up to 25% of own contributions, 3 times total) are tax-free under Sec 10(12B).
Active vs Auto Choice — which is better?
Active Choice lets you set allocation: equity up to 75% (taper post-50), corporate bonds, govt bonds, alternatives. Auto Choice picks for you — Aggressive (LC75), Moderate (LC50), or Conservative (LC25), all gliding with age. For active market-trackers, Active Choice with max equity wins. For fire-and-forget retirement money, Auto Choice Aggressive is the closest equivalent and beats most retail equity mutual funds on cost.
What happens to my NPS if I die before age 60?
The full corpus goes to the nominee — the 40% annuity rule does NOT apply on death. The nominee can also continue the account in their own name, or take part as lump sum and use part to buy an annuity for themselves. Always add and verify your nominee in the CRA portal — leaving it blank causes the corpus to go through inheritance proceedings, which can take years.