NPS Tax Calculator
What NPS saves under each of its three deduction sections, which of them survive the new tax regime, and what the corpus is really worth once 40% is compulsorily annuitised.
What the NPS tax calculator does
An NPS tax calculator shows the deduction across Sections 80CCD(1), 80CCD(1B) and 80CCD(2). Only 80CCD(2), the employer's contribution, survives the new tax regime — and at 14% of salary rather than 10%. At 60, up to 60% of the corpus is tax-free and the rest must buy an annuity whose income is taxed at your slab.
Your inputs
Which tax regime are you on?
The default since FY 2023-24. Your own NPS contribution deducts nothing here — but your employer's still does, at up to 14% of salary.
Your income tax slab
Every percentage limit on this page is a share of Basic plus DA, not of your whole CTC.
Deductible up to 14% under the new regime.
An assumption you are making, not a rate anyone is offering
Sixty per cent is the legal maximum. The rest must buy an annuity.
Tax saved every year
₹37,440
₹1,20,000 of the ₹1,70,400 going in each year is deductible, at your 30% slab plus cess.
Your contribution, in the ₹50,000 exclusive to NPS · this section does not exist under the new regime
Your contribution, inside the shared ₹1.5 lakh · this section does not exist under the new regime
Your employer's contribution
₹50,400 a year goes in without earning any deduction. It still buys units and still cannot be touched until you are 60.
NPS is a PFRDA-regulated pension product, not a mutual fund scheme; its returns are market-linked and not guaranteed, and GrowIQ Capital does not distribute it. Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.
NPS is the exception to “the new regime has no deductions”
Section 80C and the extra ₹50,000 under 80CCD(1B) both vanish under the new regime — that is why an ELSS investment there earns nothing. But 80CCD(2), your employer’s contribution, survives it, and its limit is 14% of salary rather than the 10% the old regime allows. For a salaried person on the new regime it is very nearly the last deduction standing — and it is the one you cannot claim by yourself, because it depends on your employer offering it.
NPS is a PFRDA-regulated pension product, not a mutual fund scheme; its returns are market-linked and not guaranteed, and GrowIQ Capital does not distribute it. Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.
At 60, after 30 years
You put in ₹51.12L across those years and saved ₹11.23L of tax along the way.
What you will have at 60
₹3.24Cr
Lump sum (60%), tax-free
₹1.94Cr
Must buy an annuity
₹1.29Cr
The annuity is compulsory, and its income is taxed for life
- Pension at 6%, before tax
- ₹7,76,794 a year
- Tax on it at your 30% slab
- − ₹2,33,038
- What actually arrives
- ₹45,313 a month
Buying the annuity is not itself taxed. The pension it pays is, at your slab rate, every year, permanently — and the capital behind it does not come back to you. That is the price of the deduction on the way in, and it is the part a corpus figure on its own hides.
NPS is a PFRDA-regulated pension product, not a mutual fund scheme; its returns are market-linked and not guaranteed, and GrowIQ Capital does not distribute it. Illustration only, computed from the assumptions shown — not a forecast, a projection of any product's performance, or a guarantee. Rates, prices and rules change, so the actual outcome will differ.
What this assumes
- Contributions and salary stay flat. Over 30 years neither will. A rising salary raises both the employer contribution and the percentage caps, so a real corpus would be larger than this and so would the deduction.
- You are a private-sector employee. Government employees have a 14% employer limit under both regimes. Self-employed subscribers deduct up to 20% of gross income under 80CCD(1) rather than 10% of salary, and have no employer contribution at all.
- One assumed return. NPS is a mix of equity, corporate bonds and government securities whose proportions you choose and which change with age under the auto choice. A single rate stands in for all of it.
- The annuity rate is an assumption about a product you will buy decades from now, at rates nobody can know today. Surcharge is excluded; cess is included in the tax saved.
No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. GrowIQ Capital is a mutual fund distributor and does not distribute NPS or provide tax advice. Which regime suits you depends on your whole return, not on this investment alone — this is arithmetic on the figures you entered, for discussion with a qualified tax adviser.
How the NPS calculation works
80CCD(1B) ₹50,000, then 80CCD(1) within ₹1.5 lakh, plus 80CCD(2) at 10–14% of salary
The three sections are computed separately because they do not share a fate. Your own contribution fills the ₹50,000 under 80CCD(1B) first — nothing but NPS can fill it — and only the remainder competes for what is left of the ₹1.5 lakh under Section 80C, itself capped at 10% of salary. Both vanish under the new regime. Your employer's contribution under 80CCD(2) sits outside both ceilings and survives the new regime, at 14% of salary there against 10% under the old one. At 60, up to 60% is withdrawn tax-free under Section 10(12A) and the rest must buy an annuity whose income is taxed at slab for life.
Frequently asked questions
Does NPS save tax under the new regime?
Partly, and only through your employer. Sections 80CCD(1) and 80CCD(1B) — your own contribution and the extra ₹50,000 — do not apply under the new regime. Section 80CCD(2), your employer's contribution, does apply, and its limit is 14% of salary under the new regime against 10% under the old one.
What is the extra ₹50,000 NPS deduction?
Section 80CCD(1B) allows ₹50,000 for NPS over and above the ₹1.5 lakh under Section 80C. It is the only deduction that stacks on top of that ceiling, and nothing except NPS can fill it — which is why NPS contributions should be claimed there before they are claimed under Section 80CCD(1). It is available only under the old regime.
How much of my NPS corpus is tax-free?
Up to 60% may be withdrawn as a lump sum at 60, exempt under Section 10(12A). The remaining 40% must be used to buy an annuity. The annuity purchase itself is not taxed, but the pension it pays is taxed at your slab rate as income, every year, for life.
Is the employer's NPS contribution part of my ₹1.5 lakh limit?
No. Section 80CCD(2) sits outside both the ₹1.5 lakh under Section 80C and the extra ₹50,000 under 80CCD(1B). It is limited instead by a percentage of your salary. Note that employer contributions to provident fund, NPS and superannuation together above ₹7.5 lakh a year become taxable as a perquisite.
When can I withdraw from NPS?
A Tier I account is locked until you turn 60. Partial withdrawals are permitted for specified purposes after three years, and premature exit before 60 requires at least 80% of the corpus to be annuitised. This is a far longer commitment than any other tax-saving investment.
Is NPS better than ELSS for saving tax?
They answer different questions. ELSS has a three-year lock-in and no deduction at all under the new regime. NPS locks money until 60, but its employer route still deducts under the new regime and its ₹50,000 stacks above the ₹1.5 lakh under the old one. NPS also forces an annuity at the end, which ELSS does not.
GrowIQ Capital provides financial data analytics, market information and educational content. We are not a SEBI-registered Investment Adviser or Research Analyst. Nothing on this platform constitutes investment advice or a recommendation to buy or sell any security. No returns are assured or guaranteed. Any illustration of returns is a mathematical projection, not a promise. Past performance is not indicative of future returns and does not guarantee future results.