NPS Calculator: The National Pension Scheme (NPS) calculator provided is a tool that will enable an individual to calculate the amount of money they’ll potentially receive as a pension.
About NPS Calculator
Introduced by the Central Government, NPS (National Pension Scheme) came into the existence from 1st January 2004 for all the government employees. Although, from 1st May 2009, NPS was made available for every Indian. NPS is regulated by the ‘Pension Fund Regulatory and Development Authority (PFRDA) and has been appointed as the Central Record keeping Agency (CRA) by PFRDA. Administration, keeping all record in-tact, and customer service is done by CRA, also, The Permanent Retirement Account Number (PRAN) is issued by CRA to every member of NPS.
Types of NPS Account
There are two kinds of accounts under NPS
Tier – I: No withdrawals are allowed in this criterion until an individual reaches the age of 60 years. After reaching 60 years, an individual can withdraw a certain percentage of the premium in a lumpsum whilst rest is used to buy an annuity.
Tier – II: Under this criterion, the subscriber can withdraw the money anytime. It is more like a savings account. NOTE: To open a Tier-II account, an individual must have an active Tier- I account.
NPS Calculator can be used by?
Individuals who are eligible (ages of 18 years & 60 years) can invest in the NPS scheme. However, individuals must be Know Your Customer (KYC) compliant to invest.
Method to use NPS Calculator
- Your current age and the age you are willing to acquire.
- The amount you are looking forward to investing in NPS account per month.
- The expected rate of return from your investment.
- The number of years you would like to receive as a retirement pension.
- The % age cannot be less than 40% if you wish to withdraw after 60 years of age and it cannot be less than 80% if you withdraw before 60 years of your age.
- After the retirement, the expected rate of interest of the annuity investment is the total amount you’ll earn from your pension.
Tax Benefits of NPS
- You can claim a tax deduction of up to Rs 1.5 lakh can be claimed for NPS for your contribution as well as for the contribution of the employee.
- You can claim tax benefit under section 80CCD (1), 80CCD (2), 80CCD(1B) of the income tax act.
- Under the 80CCD (1), of the Income tax act 80 (C), covers self-contribution. The salaried employees can claim a maximum deduction of 10% of their salary, while self- employed individuals can claim up to 20% of their gross income.
- Under the 80CCD (2), which is one of the parts of section 80C, covers the employer’s contribution towards NPS. The maximum amount that an individual is eligible for deduction is either the employer’s NPS contribution or 10% of basic salary plus Dearness Allowance.
- You can claim an additional self-contribution (up to Rs 50,000) under section 80CCD (1B) as NPS tax benefit.
Details Shown by NPS Calculator
The details shown are:
- The total amount earned at the time of maturity,
- The interest earned, and
- The total amount invested.