Compound monthly
Each monthly contribution grows at the expected annual return divided by 12, compounded for every remaining month until retirement age.
Reviewed for current filing season: 10 June 2026
NPS Calculator: Retirement Corpus, Pension and Tax Benefits
Estimate how your National Pension System (NPS) contributions can grow by retirement, how much you can withdraw tax-free as a lump sum, how much goes into an annuity, and the monthly pension that annuity may pay. The page also summarises the NPS tax deductions available for FY 2025-26 (AY 2026-27) filings under both regimes.
Current rules: On normal exit at 60, up to 60% of the NPS corpus can be withdrawn tax-free under section 10(12A) and at least 40% must buy an annuity. For tax breaks, own contributions qualify under 80CCD(1) and the extra Rs. 50,000 under 80CCD(1B) in the old regime, while the employer contribution under 80CCD(2) is deductible even in the default new regime - up to 14% of basic + DA.
Corpus at retirement
Monthly contributions compounded every month until your retirement age at the expected market-linked return.
Lump sum + annuity
Up to 60% of the corpus is tax-free as lump sum; at least 40% buys an annuity that pays your monthly pension.
Triple tax benefit
80CCD(1) within Rs. 1.5 lakh, extra Rs. 50,000 under 80CCD(1B), and employer contribution under 80CCD(2).
Calculate NPS Corpus and Monthly Pension
Contributions are assumed to be invested at the end of each month and compounded monthly. NPS returns are market-linked; 9-10% a year is a common long-term assumption and 6% is a typical annuity rate.
Important limits
- NPS is market-linked - the corpus shown is a projection, not a guarantee.
- On normal exit at 60, a minimum of 40% of the corpus must be used to purchase an annuity; lump sum withdrawal beyond 60% is not permitted.
- The annuity purchase is tax-exempt, but the pension received from it is taxable at slab rates.
- Tier II NPS contributions carry no tax benefit for private-sector subscribers.
Claiming NPS deductions in your ITR?
All India ITR can structure 80CCD(1), 80CCD(1B) and 80CCD(2) correctly, compare regimes and file your AY 2026-27 return.
- Old vs new regime check with NPS
- Employer 80CCD(2) verification
- Proof and Form 16 reconciliation
Corporate NPS structuring can cut tax in the new regime too - ask an expert.
Worked example: Rs. 10,000 a month from age 30
A 30-year-old contributing Rs. 10,000 every month until 60 at an assumed 10% annual return invests Rs. 36,00,000 over 30 years. With monthly compounding the projected corpus is about Rs. 2.26 crore. Keeping the annuity purchase at the minimum 40%:
| Component | Amount (approx.) | Tax treatment |
|---|---|---|
| Total contribution (30 years) | Rs. 36,00,000 | Eligible for 80CCD deductions year-on-year (old regime) |
| Corpus at 60 | Rs. 2,26,04,879 | - |
| Lump sum (60%) | Rs. 1,35,62,928 | Tax-free under section 10(12A) |
| Annuity purchase (40%) | Rs. 90,41,952 | Exempt on purchase |
| Monthly pension at 6% annuity rate | Rs. 45,210 | Taxable at slab rates |
NPS tax benefits for AY 2026-27
| Section | Who claims | Limit | Regime |
|---|---|---|---|
| 80CCD(1) | Own contribution - employee or self-employed | 10% of salary (basic + DA) for employees; 20% of gross income for self-employed; within the overall Rs. 1.5 lakh cap of section 80CCE | Old regime only |
| 80CCD(1B) | Own contribution - additional | Rs. 50,000 over and above the Rs. 1.5 lakh cap | Old regime only |
| 80CCD(2) | Employer contribution | Up to 14% of basic + DA in the new regime (and for government employers); up to 10% for private-sector employees in the old regime | Both - the only NPS deduction in the new regime |
This is why salaried taxpayers in the default new regime increasingly use corporate NPS: the employer routes part of the pay package into NPS under 80CCD(2) and that amount stays out of taxable salary even though most other deductions are unavailable. In the old regime, a taxpayer maximising 80C separately can still claim the extra Rs. 50,000 under 80CCD(1B) - worth Rs. 15,600 a year in tax at the 30% slab. See the detailed guide on NPS benefits under section 80CCD and compare regimes with the income tax calculator.
How exit from NPS works at 60
- Lump sum: up to 60% of the accumulated corpus can be withdrawn, fully exempt under section 10(12A). If the total corpus is small (within the limit notified by PFRDA), the entire amount can be withdrawn.
- Annuity: at least 40% must purchase an annuity from an empanelled Annuity Service Provider. The purchase itself is exempt; the pension it pays is added to your taxable income each year.
- Partial withdrawals: during the accumulation phase, withdrawals up to 25% of your own contributions are exempt under section 10(12B), subject to PFRDA conditions.
How the calculator works
Split the corpus
Applies your chosen annuity percentage (minimum 40%) to split the corpus into a tax-free lump sum and an annuity purchase.
Estimate pension
Multiplies the annuity corpus by the expected annuity rate and divides by 12 to project the monthly pension.
Show the gain
Compares total contributions with the projected corpus so you can see the power of compounding over your investing horizon.
Plan NPS and file with expert help
Related current ITR guides
File ITR Online
AY 2026-27 filing steps and examples
Old vs New Regime
Compare slabs, deductions and examples
Tax & Refund Calculator
Estimate tax, refund or extra payable
AIS/Form 26AS Mismatch
Fix TDS, income and refund mismatches
Belated, Revised & ITR-U
Know which correction route applies
Which ITR Form?
ITR-1, ITR-2, ITR-3 or ITR-4
Rs 12 Lakh Tax-Free
Section 87A rebate rules and examples
Income Tax Act 2025
What changes from 1 April 2026
More AY 2026-27 tax guides
Save tax: Home loan benefits · NPS (80CCD) · Donations (80G) · Education loan (80E) · Interest income (80TTA/80TTB) · Form 15G/15H · Capital gains exemptions (54/54F/54EC)
Investors and traders: F&O and intraday tax · ESOP and RSU tax · Share buyback tax · Foreign income and Schedule FA · Gift tax (56(2)(x)) · HUF taxation
Calculators and tools: Income tax calculator · Advance tax calculator · 80C tax-saving calculator · NPS calculator · Gratuity calculator · EPF calculator · Crypto tax calculator · HRA calculator
Filing and compliance: Section 87A rebate · Marginal relief · Form 10-IEA · PAN-Aadhaar link · AIS and TIS · ITR-U updated return · Discard ITR and condonation · TDS on rent and property · Income Tax Act 2025
Frequently Asked Questions
How is the NPS corpus calculated?
Monthly contributions are compounded every month at the expected annual return until retirement. NPS is market-linked, so actual results depend on fund performance; 9-10% is a common long-term planning assumption.
How much of the NPS corpus is tax-free at 60?
On normal exit at 60 or superannuation, lump sum withdrawal of up to 60% of the accumulated corpus is exempt under section 10(12A). At least 40% must be used to buy an annuity; the annuity purchase is exempt, but the monthly pension received later is taxable at slab rates.
What NPS tax deductions are available in the old regime?
Own contribution qualifies under section 80CCD(1) - up to 10% of salary for employees or 20% of gross income for the self-employed - within the overall Rs. 1.5 lakh limit of section 80CCE, plus an extra Rs. 50,000 under section 80CCD(1B). Employer contribution up to 10% of salary is separately deductible under section 80CCD(2).
Is there any NPS tax benefit in the new regime?
Yes. The employer's NPS contribution under section 80CCD(2) remains deductible in the new regime, up to 14% of basic salary plus DA. The 80CCD(1) and 80CCD(1B) deductions for your own contribution are available only in the old regime.
How is the monthly pension estimated?
The annuity portion of the corpus (minimum 40%) is multiplied by the expected annuity rate, around 6% a year, and divided by 12. The pension is not guaranteed - the actual amount depends on the annuity plan, provider and rates at the time of purchase.
Sources reviewed
- NPS Trust: Tax benefits under NPS - sections 80CCD(1), 80CCD(1B), 80CCD(2), 10(12A) and 10(12B)
- National Pension System Trust: scheme features, returns and exit rules
- Income Tax Department: Salaried individuals for AY 2026-27 - deductions and regimes
Projections use your input assumptions and monthly compounding; actual NPS returns, annuity rates and PFRDA withdrawal rules at the time of exit will differ. Tax treatment reflects the law applicable to FY 2025-26 (AY 2026-27) filings - confirm current limits on the e-filing portal or with a tax expert before investing or filing.
