NPS Calculator

What does this calculator estimate?

It projects your NPS Tier-I corpus at retirement, then splits it between the mandatory annuity purchase (minimum 40%) and the tax-free lump-sum withdrawal. From the annuity portion, it estimates the monthly pension at the rate you specify.

The corpus projection uses the same compounding math as a monthly SIP — contributions grow at the assumed return rate through the accumulation phase. All output figures are estimates; actual results depend on fund performance, which is not guaranteed.

• Minimum 40% annuitized at retirement. Statutory PFRDA rule — the remaining 60% (or more, if you choose a higher annuity percentage) is withdrawn as a tax-free lump sum.
• Retirement age: 60–75. You can defer retirement up to age 75 under PFRDA's 2021 amendments. The calculator accepts any age in this range.
• Lump sum is tax-free; pension is taxable. Section 10(12A) exempts the lump sum. Monthly annuity payments are taxable as income in the year received.
• Extra ₹50,000.00 tax deduction under 80CCD(1B). Available under the Old Regime only — over and above the standard₹1,50,000.00 Section 80C limit. An effective incentive unique to NPS.

Worked Example — ₹5,000/month, age 30 to 60, 10% return

Frequently Asked Questions

Common Mistakes to Avoid

• The 40% annuity is a statutory minimum — you can choose more, never less. PFRDA rules require at least 40% of the NPS corpus to be used to buy an annuity at retirement. Choosing a higher annuity percentage reduces the tax-free lump sum but increases the monthly pension.
• The corpus estimate is highly sensitive to the assumed return rate. NPS equity funds have historically returned 10–14%, but this is not guaranteed. A small difference in the assumed rate over 30 years produces a very large difference in the projected corpus — treat the calculator output as a planning range, not a promise.
• The lump sum is tax-free; the monthly pension is taxable. The 60% (or more) withdrawal at retirement is entirely exempt from income tax. However, the monthly pension received from the annuity is taxable in the year of receipt as 'Income from Other Sources' — it is not treated like a PPF maturity payout.
• Tier I and Tier II have different withdrawal and tax rules. Tier I (mandatory) has the 40% annuity requirement and offers 80CCD tax deductions. Tier II (voluntary) is a savings account with no lock-in and no tax benefits — this calculator only models the Tier I accumulation phase.

References

• Pension Fund Regulatory and Development Authority (PFRDA) — NPS rules
• Income Tax Act, 1961 — Section 10(12A) tax-free lump sum, Section 80CCD deductions