Min ₹500/month. No upper limit. Employer contribution entered separately in tax section.
NPS returns are market-linked — not guaranteed. Equity (E) fund historically ~10–12%. Conservative: use 8–9%.
Minimum 40% must be used to buy annuity (mandatory). Remaining 60% is tax-free lump sum.
What is NPS and How Does It Work?
NPS Corpus at Retirement (10% return)
| Monthly Contribution | Start at 25 | Start at 30 | Start at 35 | Start at 40 |
|---|---|---|---|---|
| ₹2,000 | ₹76.1L | ₹45.3L | ₹26.7L | ₹15.3L |
| ₹5,000 | ₹1.90 Cr | ₹1.13 Cr | ₹66.8L | ₹38.3L |
| ₹10,000 | ₹3.80 Cr | ₹2.27 Cr | ₹1.34 Cr | ₹76.6L |
NPS Tax Benefits — Three Layers
| Section | Limit | Annual Tax Saving (30%) |
|---|---|---|
| 80CCD(1) | Within 80C ₹1.5L | Part of ₹46,800 from 80C |
| 80CCD(1B) | ₹50,000 extra over 80C | ₹15,600/year extra |
| 80CCD(2) | 10% of salary (no cap) | ₹46,800+ depending on salary |
| Combined max | ₹2L+/year | ₹62,400+/year |
How NPS Corpus is Calculated
Where P = monthly contribution, r = monthly return rate (annual ÷ 12), n = months to retirement.
Example — ₹5,000/month, age 30, 10% return
Years to retirement: 30. Monthly rate: 0.833%. Corpus = ₹1.13 crore. Lump sum (60%): ₹67.8 lakh tax-free. Annuity (40%): ₹45.2 lakh → ~₹22,600/month pension at 6% annuity rate.
Annuity rate disclaimer
Monthly pension is estimated at 6% annuity rate — actual annuity rates vary by provider (LIC, SBI Life, HDFC Life etc.) and are set at time of purchase. Rates shown are indicative only.
Example Calculation
Frequently Asked Questions
Starting NPS at 30 with ₹5,000/month at 10% expected return gives approximately ₹1.13 crore corpus at 60. At 40% annuity, monthly pension is approximately ₹22,600. NPS returns are market-linked and not guaranteed.
80CCD(1B) gives an additional ₹50,000 deduction exclusively for NPS — over and above the ₹1.5 lakh 80C limit. At 30% bracket: ₹50,000 × 30% × 1.04 = ₹15,600/year tax saved. This is the most underutilised tax deduction in India.
Partially. At maturity (age 60), up to 60% of corpus can be withdrawn as tax-free lump sum. The remaining 40% (minimum) must buy an annuity — annuity income is taxable as salary income.
NPS for higher returns and extra ₹50K tax deduction. PPF for guaranteed returns and 100% tax-free maturity. Best strategy: max PPF (₹1.5L/year) + invest additional in NPS for the 80CCD(1B) benefit.
₹500 per contribution, ₹1,000 per year minimum for Tier I account. No maximum limit. Tier II (voluntary savings) minimum is ₹250 per contribution.
Related Calculators
Disclaimer: Results are for informational and educational purposes only — not financial, tax, or legal advice. Tax slabs, rates (EPF, PPF, home loan), and rules shown are based on data available in 2025 and may change. Always verify with a qualified professional or official government sources before making financial decisions.