Knowledge Base

National Pension System (NPS)

Corpus = Monthly × [((1+r)^n − 1) / r]

NPS offers extra ₹50,000 tax deduction under Sec 80CCD(1B) — over and above 80C limit.

Two tiers: Tier-I (retirement, lock-in till 60) and Tier-II (flexible, no tax benefit).

At maturity: 60% is tax-free lump sum, 40% must buy annuity (taxable as income).

NPS has among the lowest expense ratios in India — as low as 0.01%.

Choose Active choice with aggressive (75% equity) allocation if you're young.

Pro Tip

For maximum tax saving: ₹1.5L via 80C + ₹50K via 80CCD(1B) = ₹2L total NPS tax benefit.

National Pension System (NPS) - Complete Guide

Everything you need to know about National Pension System (NPS) and how to optimize your financial strategy.

Understanding the Formula

The core calculation is based on:

Corpus = Monthly × [((1+r)^n − 1) / r]

Key Concepts & Rules

NPS offers extra ₹50,000 tax deduction under Sec 80CCD(1B) — over and above 80C limit.

Two tiers: Tier-I (retirement, lock-in till 60) and Tier-II (flexible, no tax benefit).

At maturity: 60% is tax-free lump sum, 40% must buy annuity (taxable as income).

NPS has among the lowest expense ratios in India — as low as 0.01%.

Choose Active choice with aggressive (75% equity) allocation if you're young.

Expert Strategy

For maximum tax saving: ₹1.5L via 80C + ₹50K via 80CCD(1B) = ₹2L total NPS tax benefit.

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