NPS Money At Maturity.

Santa: Tax, no tax, partial tax... koi mujhe batayega... what will happen to my NPS money at maturity?

Banta: Say, on maturity total money in your NPS a/c is Rs.100.

Santa: Ok.

Banta: Now straightaway you have to buy annuity papers from some or other insurance companies of Rs. 40. No escape from this. And remember the pension or annuity income that you will receive from these papers will be fully taxable.

Santa: Ok (100 - 40) = 60

So I am now left with Rs. 60.

Banta: Yes. Now pay tax on Rs. 20. Say, you are in tax bracket of 30%. So pay tax of Rs. 6 (30% of 20). 

Santa: (60 - 6) = 54, so finally I will be left with Rs. 54 in my hand at maturity, which I can spend at my wish, right?

Banta: Right! Remember this magic number 0.54 then.

Santa: Ek example do.

Banta: Jaise ki socho you have accumulated total Rs. 75 lakhs in your NPS a/c. So after buying annuity and paying tax, how much money you will be left with?

Santa: Kitna?

Banta: Simple... 75 × 0.54 = 40.5 lakhs!

Santa: Ok, so...

NPS money at maturity × 0.54 = Money in hand

Santa: Yes!