Prepared by Finin2min Editorial Desk · Rates and rules verified 5 October 2026
Same monthly amount, two vehicles: NPS (tax deduction, partial annuity at exit) or equity mutual funds (no deduction, 12.5% LTCG). See the corpus, the post-tax wealth and the retirement income from each, with the December 2025 PFRDA exit rules built in.
Both vehicles receive the same monthly amount, raised by your step-up each year. NPS compounds at the blended NPS return; at exit you take a lump sum (60% or 80%) and buy an annuity with the rest. Equity mutual funds compound at the fund return and are redeemed at retirement, paying 12.5% LTCG above ₹1.25 lakh. In the old regime the NPS contribution earns a deduction of up to ₹50,000 a year under 80CCD(1B), which the calculator can reinvest in NPS.
To compare income, the calculator converts each lump sum into a monthly figure with your safe-withdrawal rate and adds the NPS annuity pension (taxed at your retirement slab).
₹10,000 a month with a 5% yearly step-up for 25 years at 30% slab (old regime): invested ₹57,27,252. NPS at 9% grows to ₹1,76,69,474 (including ₹3,90,000 of reinvested tax savings); equity funds at 12% grow to ₹2,45,95,107 and are worth ₹2,21,58,536 after LTCG. NPS gives a lump sum of ₹1,06,01,684 plus a pension of ₹35,339 a month; the fund corpus at a 4% withdrawal rate supports about ₹73,862 a month.
NPS is disciplined, low-cost and tax-assisted but locks money until 60 and forces an annuity. Mutual funds are liquid and can hold 100% equity but have no deduction and no forced discipline. The results depend heavily on the return you assume for each, so test conservative and optimistic cases. Many investors use both: NPS for the tax benefit and a base of retirement income, mutual funds for flexibility.
It depends on your tax regime, return assumptions and need for liquidity. NPS adds a tax deduction and lower costs but requires an annuity and locks the money; equity funds may return more but carry full market risk and no deduction.
Under section 10(12A) 60% of the corpus is exempt. PFRDA now permits up to 80% lump sum for non-government subscribers, but the extra 20% is not exempt as per the current reading, so this calculator treats it as taxable.
Up to ₹50,000 a year under 80CCD(1B) in the old regime, over and above the 80C limit. Employer contributions are deductible under 80CCD(2) in both regimes within the prescribed limit.
Equity mutual-fund gains held over 12 months are taxed at 12.5% above ₹1.25 lakh a year; short-term gains at 20%.
Annuity rates depend on the insurer, age and option. Use 5%-7%; the calculator lets you change it.
Rates and rules shown here were checked against the sources above on 5 October 2026. Government notifications can change a rate or rule at short notice; always confirm on the official site before you invest, file or claim.
Educational estimate only. Tax, legal, financial or regulatory treatment depends on facts and the law applicable to the relevant period. Verify the current official source or obtain professional advice before acting.
Scope: Comparison of NPS and equity mutual-fund investing for retirement under Tax Year 2026-27 rules.
The calculation engine was checked against an independently written reference implementation across 1,024 NPS-vs-fund input combinations, and against published figures where the scheme publishes them. Review date: 5 October 2026.
Prepared by Finin2min Editorial Desk. Educational estimate only.
Background, worked examples and the rules behind these numbers.