NPS calculator for the new 80% lump sum rules

What NPS is

The National Pension System is a market-linked retirement account regulated by PFRDA. Your contributions go into a mix of equity, corporate bonds and government securities that you choose, or that shifts automatically with age. Unlike PPF or EPF, there is no declared rate: the corpus grows with the markets, so the return in this calculator is an assumption.

The new exit rules

For non-government subscribers, rules notified in December 2025 changed what happens at exit (at 60, or after 15 years in the scheme):

• Up to 80% of the corpus can be taken as a lump sum; at least 20% must buy an annuity, which pays a monthly pension. Previously the split was 60/40.
• If the corpus is ₹8 lakh or less, the whole amount can be withdrawn at once.
• Between ₹8 lakh and ₹12 lakh, up to ₹6 lakh can be taken at once and the rest through instalments over at least six years, or an annuity.

How the exit is taxed

The tax law has not yet caught up with the 80% limit. Schedule II of the Income-tax Act, 2025 (old Section 10(12A)) exempts only 60% of the corpus, so if you take the full 80%, the extra 20% is added to your income and taxed at your slab. The annuity amount is not taxed when it is bought, but the pension it pays is taxed as income each year. The calculator splits the lump sum into its tax-free and taxable parts so you can see the effect of choosing anywhere between 0% and 80%.

How the calculator works

Contributions are invested at the start of each month and compound monthly at the expected return, rising once a year if you set a yearly increase. At exit, the corpus is split by your lump-sum percentage, and the monthly pension is the annuity amount × annuity rate ÷ 12.

₹5,000 a month from 30 to 60 at 10% builds a corpus of about ₹1.14 crore from ₹18 lakh contributed. Taking 60% gives a tax-free lump sum of about ₹68.4 lakh and, at a 6.5% annuity rate, a pension of about ₹24,700 a month. Taking 80% gives about ₹91.2 lakh, of which ₹22.8 lakh is taxable, and a pension of about ₹12,300.

Tax deductions while you contribute

Under the old regime, up to ₹50,000 a year of your own contribution is deductible under Section 124 (old 80CCD(1B)), over and above the ₹1.5 lakh Section 123 (old 80C) limit. Your employer's contribution is deductible under Section 124 (old 80CCD(2)) up to 14% of basic salary under the new regime and 10% under the old. Neither deduction is part of the corpus figure here.

Common questions