Taxability of Interest received on NPS

Interest accrued on yearly basis is not taxable.

But the some part of it gets taxed at the time of withdrawal.

One  must compulsorily keep aside at least 40% of the corpus to receive a regular pension from a PFRDA-registered insurance firm.  Of the remaining 60%, 40% is tax free.  (Presently) The remaining 20% is taxable as per your tax slab. (subject to change at the time of withdrawal)