NPS Calculator. See your pension.

Section 80CCD(1B) gives an additional deduction of up to ₹50,000 for your own NPS Tier I contributions, and it sits on top of the ₹1.5 lakh ceiling under Section 80CCE that covers 80C, 80CCC and 80CCD(1) together. So a taxpayer who has already exhausted ₹1.5 lakh with PPF, ELSS, EPF or life insurance can still claim ₹50,000 more, taking the total to ₹2 lakh. At a 30% slab that extra ₹50,000 saves about ₹15,600 including cess. Two conditions matter: the benefit applies only to Tier I, and it is available only under the old tax regime. Under the new regime the sole NPS deduction left is 80CCD(2) for the employer contribution.

NPS is a pension scheme, not a lump-sum savings product, so PFRDA rules require at least 40% of the Tier I corpus to be used at superannuation to purchase an annuity from an IRDAI-registered annuity service provider. The remaining 60% can be withdrawn as cash. The rule exists to manage longevity risk: without it, a retiree could spend the entire corpus early and be left with nothing in their eighties. Two exemptions apply. If the total corpus is ₹5 lakh or less at 60, you may withdraw all of it and skip the annuity. If you exit before 60, the annuitisation requirement rises to 80%, with full withdrawal allowed when the corpus is ₹2.5 lakh or less.

Tier I is the actual pension account. It is the one that carries the tax deductions under 80CCD(1), 80CCD(1B) and 80CCD(2), and it is locked until age 60 apart from limited partial withdrawals. You need a minimum of ₹500 per contribution and ₹1,000 a year to keep it active, and it is the account this calculator models. Tier II is an optional add-on savings account that sits on the same PRAN and can only be opened once Tier I exists. It has no lock-in, allows withdrawals any time, and charges no exit load, but it carries no tax deduction for most subscribers and gains are taxed on redemption. Central government employees are the exception, with a 80C-eligible Tier II variant carrying a three-year lock-in.

Active Choice lets you set your own split across four asset classes: E for equity, C for corporate bonds, G for government securities and A for alternative investments, which is capped at 5%. Equity is capped at 75% of the Tier I corpus, so NPS can never be a pure equity product. Auto Choice instead runs an age-based glide path in one of three lifecycle funds. Aggressive (LC75) holds 75% equity until age 35 and then tapers roughly 4% a year down to 15% by 55; Moderate (LC50) starts at 50%; Conservative (LC25) starts at 25%. Auto Choice suits people who do not want to review allocation; Active Choice suits those who do and want to hold the 75% equity ceiling longer.

The exit is partly exempt, not fully. Up to 60% of the Tier I corpus withdrawn as a lump sum at superannuation is tax-free under Section 10(12A), so on a ₹1.13 crore corpus roughly ₹67.8 lakh comes to you with no tax. The amount used to buy the annuity is not taxed at the moment of purchase either. What is taxed is the pension itself: every annuity instalment you receive afterwards is added to your total income for that year and taxed at your applicable slab rate, so a ₹22,605 monthly pension is ₹2.71 lakh of taxable income annually. Partial withdrawals of up to 25% of your own contributions before 60 are also exempt under Section 10(12B).