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How to use the nps calculator
- 1Enter your monthly contribution and your current age.
- 2Set the retirement age — 60 is the normal exit for NPS.
- 3Choose an expected return based on your equity and debt mix.
- 4Read the corpus, then the split between the tax-free lump sum and the compulsory annuity.
Only part of the corpus is yours to take
This is the rule that surprises people, and it is why the headline corpus figure other calculators show is misleading. At 60, at least 40% of your NPS corpus must be used to buy an annuity from a life insurer. You cannot take it as cash. It buys a monthly pension for life, and that pension is taxable as ordinary income in the year you receive it.
The remaining 60% can be withdrawn as a lump sum, and that part is tax-free. So a corpus of ₹1 crore is not ₹1 crore in your hand — it is ₹60 lakh tax-free plus a pension of perhaps ₹20,000 a month, depending on the annuity rate at the time.
This calculator shows all three numbers, because the corpus alone tells you very little about what retirement will actually feel like. If your corpus is under ₹5 lakh at exit, incidentally, the annuity requirement is waived entirely and you may withdraw the lot.
Why the annuity rate matters more than the return
Two variables drive your eventual pension: how much the corpus grows, and what rate an insurer will pay on the annuity you buy with it. People obsess over the first and ignore the second, but the annuity rate has an enormous effect and you have almost no control over it.
Annuity rates track long-term interest rates and are quoted by insurers at the moment you buy. They have ranged roughly from 5% to 7% in recent years for a simple lifetime annuity. On a ₹40 lakh annuity corpus, the difference between 5.5% and 6.5% is about ₹3,300 a month, every month, for the rest of your life — and you are locked into whatever rate happens to prevail on the day you retire.
There are also different annuity types, and the rate you are quoted depends on which you choose. A plain lifetime annuity that stops on death pays the most. One that continues to your spouse pays less. One that returns the purchase price to your heirs pays least of all, often a full percentage point below the simple option. The rate is an input here so you can see the effect of each choice rather than accepting a single default.
The tax position, which is the real attraction
NPS carries a deduction that no other retirement product does. Beyond the ₹1.5 lakh of §80C — which EPF, PPF, ELSS and life insurance premiums all compete for — §80CCD(1B) offers an additional ₹50,000 deduction exclusively for NPS. For someone in the 30% bracket under the old regime, that is a straightforward ₹15,000 saved each year.
Contributions made by your employer under §80CCD(2) are deductible on top of that, up to 14% of basic for government employees and 14% under the new regime for others. That route is the most tax-efficient of the three, because the deduction survives even under the new regime, where §80C and §80CCD(1B) do not.
At the other end, 60% of the corpus is tax-free on withdrawal and the annuity income is taxed at your slab. Because most people's income falls at retirement, that is often a lower rate than the one at which the deduction was claimed — which is the whole point of a deferred-tax product.
What the projection assumes
The return is an assumption, not a rate. NPS invests across equity, corporate bonds and government securities in a mix you choose, and equity allocation is capped at 75% until 50, tapering thereafter under the auto choice. A projection at 10% assumes a substantial equity weighting held for decades; a conservative debt-heavy allocation will not deliver it. Neither figure is guaranteed by anyone.
The model also assumes a fixed monthly contribution, whereas most people increase theirs as income rises. If you expect to step yours up, the step-up SIP calculator on this site models that pattern and gives a materially higher figure.
Finally, it assumes you stay invested to 60. Premature exit before that requires 80% of the corpus to go into an annuity rather than 40%, leaving only 20% as cash — a much harsher rule, and the reason NPS should hold money you are certain you will not need before retirement.
Frequently asked questions
How much of my NPS corpus can I actually withdraw at 60?
Up to 60%, and that part is tax-free. At least 40% must buy an annuity that pays a monthly pension, which is taxable as income. If the total corpus is under ₹5 lakh, the annuity requirement is waived.
What return should I assume?
It depends entirely on your asset mix. A heavily equity-weighted allocation held for decades has historically returned around 10–12%; a debt-heavy one considerably less. Nothing in NPS is guaranteed, so treat the output as a scenario rather than a projection.
What tax benefit does NPS give?
An extra ₹50,000 deduction under §80CCD(1B), over and above the ₹1.5 lakh §80C limit, plus employer contributions under §80CCD(2). The employer route is the only one that survives under the new tax regime.
Can I exit NPS before 60?
Yes, but on much worse terms: 80% of the corpus must go into an annuity and only 20% comes back as cash. Partial withdrawals of up to 25% of your own contributions are allowed after three years for specified purposes such as education, marriage, illness or buying a home.
Is NPS better than EPF?
They do different jobs. EPF pays a fixed notified rate with sovereign backing and no equity risk; NPS carries market risk with the possibility of higher returns and an extra tax deduction, but forces most of the corpus into an annuity. Many people hold both, which is why both calculators are here.
Are my numbers uploaded?
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