What are rules for NPS withdrawal?
Here are the withdrawal rules for NPS
Subscribers can exit from NPS upon reaching the age of 60 years or upon death. A subscriber has to use 40% of the corpus to purchase an annuity and the remaining can be withdrawn in a lump sum upon exit at retirement. The monthly annuity or pension is paid via direct bank transfer to the subscribers through Annuity Service Providers. In case the total retirement corpus is less than or equal to Rs.2 lakh, then subscribers can withdraw the whole sum without having to purchase an annuity.
Premature exit from NPS before retirement age is allowed if the subscriber has been with NPS for minimum 10 years. In the case of premature exit, 80% of the corpus has to be used to purchase annuity and the remaining 20% is paid in a lump sum. In the unfortunate event of the death of the subscriber, the retirement corpus will be paid to the nominee or legal heir of the subscriber.
Subscribers can choose to defer the lump-sum withdrawable amount of up to 60% till the age of 70 years. Subscribers can also choose to contribute beyond the age of 60 years but not above 70 years.
Subscribers can also use more than 40% of the corpus to purchase an annuity at the age of 60 years.
NPS allows partial withdrawals up to 25% of the corpus for certain purposes such as higher education, wedding, house construction, and treatment of specified illnesses.
Only 3 partial withdrawals are allowed during the whole tenure.
NPS withdrawn (60% of the NPS amount) at the time of retirement is now totally tax-free.
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