Question 1

What is the NPS interest rate in 2026?

Accepted Answer

NPS doesn't have a fixed interest rate as it's a market-linked scheme. Historical returns range from 9-12% for equity (Tier E), 8-10% for corporate bonds (Tier C), and 7-9% for government securities (Tier G).

Question 2

What is the additional tax benefit of NPS?

Accepted Answer

NPS offers an additional tax deduction of ₹50,000 under Section 80CCD(1B), over and above the ₹1.5 lakh limit of Section 80C. This is available under both old and new tax regimes.

Question 3

What is the NPS lock-in period?

Accepted Answer

NPS has a lock-in until the subscriber turns 60. Partial withdrawal (up to 25% of own contributions) is allowed after 3 years for specific purposes like higher education, home purchase, or medical treatment.

Question 4

How much of NPS corpus is tax-free at maturity?

Accepted Answer

At maturity (age 60), 60% of the NPS corpus can be withdrawn tax-free. The remaining 40% must be used to purchase an annuity, which provides regular pension income (taxable as per slab).

Question 5

Is NPS better than PPF?

Accepted Answer

NPS offers potentially higher returns (market-linked) and additional tax benefits (₹50,000 under 80CCD(1B)), but has a longer lock-in (until 60) and partial taxability. PPF offers guaranteed, fully tax-free returns with a 15-year lock-in.

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National Pension Scheme