How to use the NPS Calculator: Plan Your Retirement Annuity
The EzCalcy NPS Calculator calculates the potential corpus you will build through the National Pension System (NPS). By investing small amounts monthly, you can secure your retirement with market-linked returns and guaranteed pension income. As of 2024-25, it is one of the most tax-efficient retirement vehicles in India.
🔐 Tier I vs Tier II: Quick Comparison
| Feature | Tier I (Mandatory) | Tier II (Voluntary) |
|---|---|---|
| Status | Pension Account | Investment Account |
| Lock-in | Until Age 60 | No Lock-in (Liquid) |
| Tax Benefit | Up to ₹2L (80C+80CCD) | None (except Govt employees) |
📈 Asset Classes Explained
- Class E (Equity): High risk, high return. Max 75% allocation. Best for young investors.
- Class C (Corporate Bonds): Moderate risk, fixed income. Safer than equity.
- Class G (Govt Securities): Lowest risk. Ideal for capital protection near retirement.
- Class A (Alt Assets): REITs/InvITs. Max 5% allocation.
The Formula
Corpus = P × ((1+ROI/12)^Months - 1) / (ROI/12) × (1+ROI/12)
Tax Rules on Exit (Maturity)
- 60% Lump Sum: This portion is completely Tax-Free.
- 40% Annuity: You must buy an annuity plan. The monthly pension received from this is Taxable as per your income tax slab.
- Partial Withdrawal: Up to 25% of absolute own contribution is tax-exempt for specific reasons (illness, house, education).
💡 The Exclusive ₹50,000 Deduction
NPS is the only investment that offers an additional tax deduction of ₹50,000 under Section 80CCD(1B), over and above the ₹1.5 Lakh limit of Section 80C. This alone attracts many investors to open a Tier I account.