What is the tax benefit of NPS under Section 80CCD(1B)?

Section 80CCD(1B) allows an additional deduction of up to ₹50,000 for NPS contributions, over and above the ₹1.5 lakh limit under Section 80C. This is available only under the old tax regime. So a person in the 30% tax bracket can save up to ₹15,600 (₹50,000 × 31.2% including cess) in additional tax just by investing in NPS.

How does NPS payout work at retirement (age 60)?

At age 60, you can withdraw up to 60% of your NPS corpus as a tax-free lumpsum. The remaining 40% must be used to purchase an annuity plan from a registered insurer, which provides a monthly pension for life. The annuity income is taxable as per your income tax slab at that time. The calculator estimates the monthly pension assuming a 6% annuity rate.

NPS Calculator

Estimate your NPS corpus and monthly pension at retirement (age 60).

Your NPS Details

Monthly Contribution ₹5,000

₹500 ₹1 L

Expected Annual Return 10%

6% 14%

Your Current Age 30 yrs

18 yrs 59 yrs

Retirement age is fixed at 60 years

NPS fund type return benchmarks (historical):

Aggressive (75% equity) 10–12%

Moderate (50% equity) 9–10%

Conservative (25% equity) 7–9%

Total Invested

—

Total Corpus

—

Lumpsum (60%)

—

Tax-free withdrawal

Annuity (40%)

—

Mandatory annuity purchase

Estimated Monthly Pension

—

Based on 6% annuity rate (indicative)

Corpus Breakdown

Invested

Returns

How NPS Payout Works — The 60/40 Rule

60%

Tax-Free Lumpsum Withdrawal

At age 60, you can withdraw up to 60% of your NPS corpus as a tax-free lumpsum. You can use this for any purpose — debt repayment, investment, or expenses.

40%

Mandatory Annuity Purchase

The remaining 40% must be used to buy an annuity from a registered insurer. The annuity pays a fixed monthly pension for life. Annuity income is taxable as per your slab at the time.

Disclaimer: This calculator provides estimates based on assumed constant returns and a 6% annuity rate. Actual NPS returns vary based on fund choice and market performance. Annuity rates vary by insurer and age at retirement. The 80CCD(1B) tax benefit is available only under the old tax regime. Consult a qualified financial advisor before making NPS contribution decisions.

Want personalised advice?

Our CA can help you open an NPS account, choose the right fund allocation, and maximise your 80CCD(1B) tax benefit.

Talk to our CA on WhatsApp →

Related Calculators

SIP Calculator

Monthly investment planner

Lumpsum Calculator

One-time investment growth

Tax Calculator

See 80CCD(1B) tax savings