IS NPS good or bad ?

 Lets calculate. You have got 30 more years to save and if we assume an average return of 8% throughout this period, then with a monthly investment of Rs. 5000, you'll achieve a corpus of around Rs. 75 lacs.

Now, NPS lump sum withdrawl of upto 60% is tax free while annuitization is mandatory for a minimum of 40% of the corpus. Assuming a 4% annuity rate and assuming that you go for only 40% annuitization, you'll get a monthly pension of around Rs. 10,000 and walk away with around Rs. 45 lacs in hand as a tax free lump sum amount of money at retirement.

PFA the calculator I utilized on the NPS Trust website.

Edit 1: NPS also enjoys tax benefits on contributions u/s 80 C and additional exemptions u/s 80 CCD of the Income Tax Act. You can not only claim exemptions under normal 80C exemptions of upto 1.5 lacs but also an additional exemption of ₹50k on contribution. Further, the returns are also not taxed. So NPS is also a good tax savings instrument.


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