s.123 · s.124 · 80CCD(2) · PFRDA exit rules
NPS — corpus, lump sum, pension
What a monthly NPS contribution becomes by 60, how much you can take out tax-free, and what the rest pays every month — plus the deductions in both regimes.
The rules this tool applies
- Your own contribution: up to 10% of salary (20% of gross for the self-employed) within the ₹1.5 lakh 80C basket (now s.123) — old regime only.
- Extra ₹50,000 under 80CCD(1B) (now s.124(3)) over and above 80C — old regime only; not available in the new regime.
- Employer contribution under 80CCD(2): deductible in both regimes — 14% of basic + DA in the new regime (all employers, from FY 2024-25), 10% private / 14% government in the old. Employer PF + NPS + superannuation above ₹7.5 lakh a year is taxable.
- Exit at 60: 60% of the corpus as lump sum is tax-free (old s.10(12A)). PFRDA rules from December 2025 allow up to 80% lump sum with a minimum 20% annuity — but the slice above 60% is taxed at slab. Corpus up to ₹2.5 lakh can be withdrawn in full.
- Annuity income is taxed as pension every year. Returns are market-linked — the % you enter is an assumption, not a promise.
Worked example
₹5,000 a month from age 30, 10% assumed: 30 years, ₹18,00,000 invested → corpus ₹1,13,96,627. 60% lump sum ₹68,37,976 tax-free; 40% (₹45,58,651) into an annuity at 6% pays about ₹22,793 a month, taxable as pension.
Edge cases to know
- Tier II has no tax benefit (except for central-government employees' 3-year lock-in) and no exit restriction.
- Premature exit before 60: at least 80% must buy an annuity; only 20% comes as lump sum (full withdrawal if corpus ≤ ₹1 lakh).
- Partial withdrawals — up to 25% of own contributions, three times, for listed reasons — are tax-free.
- Vatsalya / minor NPS follows different exit rules; this tool is for Tier I adult accounts.
Related tools
- Income tax calculator — where the employer deduction lands.
- Regime comparator — old vs new with NPS in.
- EPF calculator.
Last verified: 18 September 2026 — 80CCD rules per the Income-tax Act 2025 section map (s.123/s.124) and PFRDA exit circular of December 2025; 14% employer limit per Finance (No.2) Act 2024. Rates: Ministry of Finance notification of 30 June 2026 for July–September 2026 (ninth unchanged quarter); re-checked quarterly. · Not tax advice.