NPS Calculator

Under the old tax regime, NPS offers two exclusive deductions: (1) Section 80CCD(1) — employee contribution up to 10% of salary, within the overall Rs 1.5 lakh Section 80C ceiling; and (2) Section 80CCD(1B) — an additional Rs 50,000 exclusive to NPS, over and above the Rs 1.5 lakh 80C cap. At a 30% slab, the Rs 50,000 80CCD(1B) alone saves Rs 15,000 per year (Rs 15,600 with 4% cess) that PPF and ELSS cannot access. The combined personal max is Rs 2 lakh per year (Rs 1.5L + Rs 50k), saving Rs 60,000 (Rs 62,400 with cess). Under the new tax regime, Sections 80CCD(1) and 80CCD(1B) are not available; only the employer contribution under Section 80CCD(2) — up to 14% of Basic+DA — remains deductible, and this benefit is available in both regimes.

Government subscribers (Central Government employees who joined after January 2004, and state government employees under NPS) use the classic 60/40 exit: a maximum 60% lump sum (tax-free under Section 10(12A)) and a mandatory minimum 40% annuity. If the total corpus is Rs 8 lakh or less, 100% lump sum is permitted. Private sector / All-Citizen Model subscribers, after the December 2025 PFRDA amendment, get a more favourable 80/20 split for corpus above Rs 12 lakh: up to 80% as lump sum, 20% as annuity. The 60% tax-free ceiling under Section 10(12A) still applies to 60% of the total corpus — meaning the extra 20% lump sum slice (from 60% to 80%) may be taxable at the subscriber's slab rate (MoF clarification pending as of June 2026). Annuity income is taxed as salary in the year received, regardless of subscriber category.

NPS Vatsalya is a variant of the National Pension System introduced in Union Budget 2024-25 and officially launched in September 2024. It allows parents or guardians to open an NPS account for a minor (Indian citizen below 18 years of age). The minimum contribution is Rs 1,000 per year with no upper limit. The account is managed by the parent/guardian until the child turns 18. At age 18, the minor must complete fresh KYC and the account automatically converts to a standard Tier-I NPS account, retaining the accumulated corpus. This gives a very long accumulation horizon — starting at, say, age 5 with retirement at 60 means 55 years of compounding. The scheme is administered by PFRDA and contributions can be made online via eNPS.

Under Section 10(12A) of the Income Tax Act, 60% of the total NPS corpus at superannuation is tax-free for all subscriber categories. For government subscribers who take a maximum 60% lump sum, the entire lump sum is therefore tax-free. For non-government subscribers who exercise the new 80% lump-sum option (post-December 2025), the position is: the first 60% of total corpus is tax-free, but the extra 20% (from 60% to 80% of corpus) that constitutes the additional lump sum may be taxable at the subscriber's applicable slab rate. As of June 2026, the Ministry of Finance clarification on the exact taxation of this extra 20% slice is pending. The annuity income received each year is fully taxable as salary income at the subscriber's applicable slab in the year it is received.