NPS Basics — 2026
| Feature | Details |
|---|---|
| Who can invest | Indian citizens 18–70 years |
| Min annual contribution | ₹1,000 (Tier 1); ₹250 (Tier 2) |
| Returns | 8–12% p.a. (market-linked) |
| Lock-in | Till 60 years (Tier 1) |
| Extra Tax Benefit | ₹50,000 under 80CCD(1B) |
| At Retirement | 60% lump sum (tax-free) + 40% annuity (pension) |
NPS Tax Benefit — Full Picture
| Section | Benefit | Limit | Available In |
|---|---|---|---|
| 80CCD(1) | Employee NPS contribution | Part of ₹1.5L 80C limit | Old Regime only |
| 80CCD(1B) | Additional NPS contribution | Extra ₹50,000 (total ₹2L) | Old Regime only |
| 80CCD(2) | Employer NPS contribution | 14% of salary (Govt) / 10% (others) | Both regimes |
Important: 80CCD(2) (employer contribution) is the ONLY NPS benefit available in the New Tax Regime. Personal contributions' benefits (80CCD(1) and 1B) are Old Regime only.
NPS Fund Options — Which to Choose?
| Asset Class | What It Invests In | Expected Return | Risk |
|---|---|---|---|
| Equity (E) | Stock markets | 10–13% | High |
| Corporate Bonds (C) | Corporate debt | 8–9% | Medium |
| Government Securities (G) | Govt bonds | 7–8% | Low |
| Alternative (A) | REITs, AIFs, Infrastructure | 9–11% | Medium-High |
Recommended Allocation by Age
| Age | Equity (E) | Corporate (C) | Govt (G) |
|---|---|---|---|
| Under 35 | 75% | 15% | 10% |
| 35–45 | 60% | 25% | 15% |
| 45–55 | 40% | 35% | 25% |
| 55–60 | 20% | 40% | 40% |
NPS Pension Calculation — Example
If ₹5,000/month invested from age 30 to 60 at 10% returns:
- Total corpus at 60: ~₹1.13 crore
- Lump sum (60%): ₹67.8 lakh (tax-free)
- Annuity corpus (40%): ₹45.2 lakh
- Monthly pension at 6% annuity rate: ~₹22,600/month
🎯 Calculate Your NPS Returns
Use NPS Calculator →Q: Which NPS fund manager is best?
All NPS fund managers (SBI Pension, HDFC Pension, ICICI Pension, Kotak, Aditya Birla) are regulated by PFRDA. Returns vary by 1-2% across fund managers for the same asset class. SBI and HDFC Pension funds have consistently performed well in equity allocation historically. Check latest 5-year returns on nps.nsdl.com before choosing.
Q: Can I exit NPS before 60?
Premature exit after 10 years: only 20% as lump sum, 80% must be used to buy annuity. This is significantly restrictive. If you think you may need money before 60, NPS is not ideal — consider PPF or ELSS instead. NPS is best for committed long-term retirement savings.
⚠️ Disclaimer
For educational purposes only. Consult a certified financial advisor for personalised advice.