How to interpret your result
Total Corpus at 60 is your full projected accumulation — but you don't get all of it as cash. Only up to 60% can be withdrawn as a lump sum at maturity (tax-free); the remaining 40%+ must go into an annuity that pays you a monthly pension, and that pension income is taxable.
The Section 80CCD(1B) deduction (₹50,000/year, over and above the ₹1.5 lakh 80C limit) is a genuine extra tax saving on your contributions, but it doesn't change the projected corpus shown here — that's driven entirely by your contribution amount, years to retirement, and assumed return rate.
Treat the return rate as an assumption, not a guarantee — NPS returns depend on which asset allocation (equity/corporate debt/government securities) you've chosen within your NPS account, and actual long-run returns can differ from what you enter here.
NPS: building a pension for self-employed Indians
Most business owners and freelancers have no employer-backed retirement plan. The National Pension System is the government's answer — a professionally managed, low-cost pension fund that also saves tax.
NPS tax benefits: the best deal in 80C
| Deduction | Limit | Regime |
|---|---|---|
| 80CCD(1) — own contribution | Up to 20% of gross income (self-employed) | Old regime only |
| 80CCD(1B) — additional NPS | ₹50,000 extra (over 80C limit) | Old regime only |
| 80CCD(2) — employer contribution | 14% of salary (govt) / 10% (private) | Both regimes |
A self-employed person earning ₹12 lakh can claim:
- ₹1,50,000 via 80C (combined with other investments)
- ₹50,000 additional via 80CCD(1B) = ₹2,00,000 total NPS-related deduction (under old regime)
At retirement: how the corpus is split
At age 60:
- 60% of corpus — withdrawable as lump sum, tax-free
- 40% of corpus — must purchase an annuity (generates monthly pension)
- If total corpus < ₹5 lakh, the entire amount can be withdrawn as lump sum
NPS fund manager choice matters
NPS lets you choose your fund manager and asset allocation. For equity exposure (E class), the maximum allocation is:
- Age < 50: up to 75%
- Age 50–60: auto-reduces from 75% to 50%
Historical NPS equity fund returns (10-year): 12–14% CAGR. Debt component: 7–8%.