NPS - Section 323₹2L deduction (old)

NPS Retirement Corpus Calculator

Project your retirement corpus, the 60% lump-sum, and the annuity portion. Section 323 - up to ₹2 lakh deduction under old regime; employer contribution also deductible under new regime.

Corpus at age 60
₹1,84,44,741
30 years of investment at 9% p.a.
  • Total contributed₹36,00,000
  • Investment growth₹1,48,44,741
  • 60% lump-sum withdrawal (tax-free)₹1,10,66,844
  • 40% annuity corpus₹73,77,896
  • Monthly pension at 6.5% annuity₹39,964
The 60% lump-sum withdrawal at retirement is fully tax-free. The 40% annuity income is taxable as salary/pension income. NPS contributions during accumulation qualify for Section 323 deductions.

How the NPS deduction stacks

  • Section 323(1) - employee/self contribution. Up to 10% of basic + DA (or 20% of gross total income for self-employed). Counted within the ₹1.5 lakh Section 123 (formerly 80C) cap.
  • Section 323(1B) - additional ₹50,000 over and above 80C. Exclusive to NPS self-contribution. Effective combined 80C + NPS = ₹2 lakh.
  • Section 323(2) - employer contribution up to 10% of salary (14% for government employees). This is the only NPS deduction available under the new tax regime.

On retirement at 60, 60% of the corpus is withdrawn lump-sum (tax-free), and 40% compulsorily buys an annuity (the annuity income is taxable).

FAQs

How much NPS deduction can I claim?

Section 323(1) - up to 10% of salary (basic + DA) under the ₹1.5 lakh 80C cap. Section 323(1B) - additional ₹50,000 over and above 80C, exclusive to NPS self-contribution. Section 323(2) - employer contribution up to 10% of salary (14% for government) - allowed even under the new tax regime.

What is the lock-in for NPS?

NPS is locked until age 60 (Tier-I account). Partial withdrawal up to 25% allowed after 3 years for specific reasons. On exit at 60, at least 40% must be used to buy an annuity; up to 60% can be withdrawn lump-sum (and that 60% is tax-free).

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