NPS Withdrawal Rules - 2025

There are multiple withdrawal rules regarding NPS Tier I account. The key withdrawal rules for tier I account involve specific scenarios which are partial withdrawal, withdrawal before and after maturity.

Tier II

There is no withdrawal limit for tier II account unlike tier I account. Tier II accounts are preferable for investing more but this does not feature any tax benefits under Section 80C.

Rules Pertaining to NPS Withdrawals

National Pension Scheme withdrawal Rules vary with different rules framed for different categories for Government sectors.

1. Rules for Government sector subscribers on retirement

1. An individual should invest a minimum of 40% of the amount in annuity, with an option to withdraw the balance in a lumpsum. You can Use NPS calculator to get an estimate of your scheme amount.
2. The lump sum withdrawal can be postponed till a subscriber attains the age of 70 years
3. In the event of the accumulated pension being less than Rs.5 lakh, an individual can choose to withdraw the complete amount

2. Rules for Government sector subscribers who take voluntary retirement

1. A minimum of 80% of the amount should be invested in annuity
2. In the event of the accumulated pension being less than Rs.2.5 lakh, an individual can choose to withdraw the complete amount
3. Balance accumulated amount of NPS will be paid to subscriber 

3. Rules pertaining to death of Government sector subscriber

1. In the event of a subscriber passing away before reaching retirement age, the complete amount is given to the nominee/legal heir.

4. Rules for corporate sector employees & citizens on retirement

1. An individual should invest a minimum of 40% of the amount in annuity, with an option to withdraw the balance in lumpsum
2. The lump sum withdrawal can be postponed till a subscriber attains the age of 70 years
3. In the event of the accumulated pension being less than or equal to Rs.5 lakh, an individual can choose to withdraw the complete amount

5. Rules for corporate sector employees & citizens on voluntary exit

1. An individual should have maintained an account for at least ten years
2. 80% of the amount should be used to purchase annuity
3. In the event of the accumulated pension being less than or equal to Rs.2.5 lakh, an individual can choose to withdraw the complete amount

6. Rules pertaining to death of corporate sector subscriber

1. In the event of death of a subscriber, the nominee can choose to withdraw the accumulated amount as a lump sum, henceforth taking the NPS death benefits

NPS Partial Withdrawal Rules

1. A subscriber can withdraw only three times during the tenure of his/her subscription
2. A subscriber can withdraw only up to 25% of his contributions towards this scheme
3. A subscriber should have been a member of this scheme for at least three years in order to be eligible for partial withdrawal
4. Partial withdrawal is allowed only in certain exceptional cases, like education of his/her children, marriage expenses, house construction or medical emergencies

These NPS withdrawal rules have been designed to simplify the working of this scheme, helping a subscriber plan for his/her retirement.

NPS Premature Withdrawal Rules - Tier I & II

NPS Tier I -

NPS Tier II - For those who invest in a Tier-II account, the withdrawals permitted are unlimited. Therefore, the NPS Account becomes like any savings bank account. However, withdrawing money can be a tedious process when it comes to NPS as the Points of Presence through which withdrawal requests can be made are few in number. There is also no online portal making the whole process longer.

Difference between NPS & EPF Withdrawal

There are multiple difference between the National Pension Scheme and the Employee's Provident Fund (EPF). Each scheme has its own benefits and drawbacks.

Given below are some of the key difference between the NPS & EPF schemes when it comes to withdrawal options:

Current NPS Partial Withdrawal Rules

NPS Partial Withdrawal Rules were amended. Given below are the current rules that apply to NPS Partial Withdrawals along with other important information.

Amount Allowed for Partial Withdrawal

Earlier partial withdrawals from NPS were not allowed, but with modifications made to the rules, contributors can now withdraw up to 25% of their savings. The partial withdrawal can only be made on the principal amount. Interest earned on the account cannot be withdrawn. Therefore, one can withdraw 25% of the amount contributed to the NPS account and not the total account balance.

Time Period for Partial Withdrawal

Furthermore, a withdrawal can be made only after completing three years. Three withdrawals can be made with a five-year gap between each partial withdrawal.

For example, if you deposit Rs.5,000 every month for a period of three years. After three years, you can make partial withdrawals of up to 25% of Rs.6 lakhs, which is equal to Rs.1.5 lakhs. Only after another fine years will you be allowed to make another partial withdrawal.

Reasons for NPS Partial Withdrawal

Partial withdrawals can be made for the following specified emergencies:

1. Child's higher education
2. Child's marriage
3. Treatment of Critical Illness of self, spouse, children or dependent parents
4. Purchase or construction of first house (not applicable if the subscriber is already a sole or joint owner of a residential house or flat, not including ancestral property)
5. Fatal Accidents

NPS Exceptions for five-year Gap Rule

In cases of critical illnesses, the five-year gap rule will not apply. There are 13 critical illnesses, accidents and life-threatening ailments which are accepted.

1. Stroke
2. Multiple Sclerosis
3. Cancer
4. Kidney Failure (End Stage Renal Failure)
5. Heart Valve Surgery
6. Primary Pulmonary Arterial Hypertension
7. Aorta Graft Surgery
8. Major Organ Transplant
9. Coronary Artery Bypass Graft
10. Paralysis
11. Coma
12. Total blindness
13. Myocardial Infarction
14. Accident of serious or life-threatening nature
15. Any critical illness that is life-threatening as stipulated in the guidelines, circulars or notifications issued from time to time by the Authority

Documents required for NPS withdrawal:

The following documents are required for NPS withdrawal:

1. Valid identity proof like Aadhaar card, PAN card, Passport, etc.
2. Valid address proof like electricity bill, ration card,  etc.
3. Original PAN card
4. Bank’s letterhead, passbook, cancelled cheque, bank certificate with proof of account holder name, number and IFSC code
5. You also need to submit an undertaking and request form if you are eligible for complete withdrawal
6. Advance stamped receipt signed and filled, along with the revenue stamp of the concerned NPS subscriber

How to Withdraw NPS Online?

Exiting NPS online can be performed by logging into user’s NPS account using PRAN number and password. Withdrawal requests can be initiated on any business day and users can perform withdrawal process without any restriction for tier II account, while there are few restrictions on tier account.

How to Withdraw NPS Offline?

NPS withdrawal can be processed offline by filling in the relevant form. There are three different NPS forms that are required to process the exit from NPS subscriber and those are:

1. Exit from NPS subscription before maturity
2. Incapacitation of subscriber or withdrawal after superannuation (maturity)
3. Partial withdrawal of NPS contribution
4. NPS withdrawal form of government employee subscriber of the scheme

Dully filled NPS forms to be submitted at a NPS PoP (Point of Presence) along with required documents. The following are the details that need to be mentioned in the form are:

1. PRAN number
2. PAN number
3. Subscriber name, address, and gender
4. Subscriber date of birth

1.  Nominee details
2. Bank account details

1. Bank account number
2. IFSC code
3. Bank name and branch address

Other details required to be mentioned include much about the corpus including annuity provider and type of annuity. The following are the types of annuities available at the time of withdrawal:

1. Annuity or pension payable for life
2. Annuity payment 5,10, 15 or 20 years with certainty till subscriber’s death
3. Annuity for life and on death of member’s life purchase price is returned
4. Annuity payout at increasing rate of 3.00% per annum

1. Annuit for life and 50% payable to spouse on death of subscriber
2. Annuit for life and 100% payable to spouse on death of subscriber
3. Annuity purchase price refunded on death of last survivor and 100% payable to spouse on death of the subscriber

How to Check the Status of NPS Withdrawal?

The following are the steps to check the NPS withdrawal status online:

1. Log into the NPS online portal- https://www.cra-nsdl.com/CRA/
2. Click on 'Limited Access View' pre-login option
3. Click on ‘Exit Withdrawal Request’
4. Select ‘Withdrawal Request Status View’

A new page will open that will display the NPS withdrawal status.

Subscribers can also view their NPS withdrawal status through the Limited Access View, which is a pre-login functionality available CRA website home page.

NPS Taxation Rules

NPS withdrawal is taxable, and the taxation rules differ depending upon the type of withdrawal. Here are the taxation rules for partial withdrawal, premature exit, and superannuation (maturity):

Partial Withdrawal:

The taxation rules for partial withdrawal are:

1. Zero tax only in case of partial withdrawal of NPS contribution
2. Zero tax will be levied if withdrawal is done at least after 10 years of subscription

Limitation of Partial Withdrawal:

Some of the limitations of partial withdrawal are:

1. The permitted withdrawal amount as lump sum is 25% of the total contribution

1. Withdrawal can be done three times during the lifetime of the NPS account

Premature Exit:

The taxation rules for premature exit from NPS scheme are:

1. Lump sum withdrawal of 20% is taxable
2. Mandatory conversion of 80% corpus into annuity which is taxable as per the tax slab in the year of payout

Superannuation (maturity):

The taxation rules for superannuation for NPS withdrawal are:

1. No tax levied on 60% of the NPS withdrawal on superannuation (maturity)
2. 40% of the NPS withdrawal to be converted into purchase annuities mandatorily

NPS Exit Rules

The prior stipulation for exit from NPS was 60 years. But this rule was modified and now NPS subscribers are allowed to exit at the age of retirement designated by their employers. Some employers prefer 58 years for the retirement age of their employees.

The National Pension Scheme provides the following options for subscribers to exit:

1. Purchase of annuity with 40%of the total contribution upon retirement Government Authorized agencies
2. Remaining 60% can withdraw as lump sum or installments 

The following are the alternatives that the subscriber can avail themselves of are:

• On attaining 60 years, time of purchase of annuity plan can be extended for three years

Other details regarding this option are:

1. This option is applicable for those subscribers who have major share of contribution in equities
2. Withdrawal of corpus can be delayed in case market performance is low during retirement
3. Request to be submitted in writing in 15 days prior retirement to the concerned authority
4. If subscriber dies between the deferment period, then the bonus can be availed by the spouse to buy annuity

• 60% of the withdrawal can be postponed till the age of 70 years

Other details regarding this option are:

1. Fresh contribution can be made during this period
2. On attaining 70 years, amount can be withdrawn in lump sum or in instalments
3. 15 days prior retirement, the subscriber needs to request for this option in writing to the concerned authority

Grievance Redressal as per Regulation 31 of  PFRDA (Redressal of Subscriber Grievance) Regulations, 2015:

The details of the Ombudsman appointed are available on the PFRDA website – www.pfrda.org.in.

At present, Shri Narender Kumar Bhola has been appointed as the new Ombudsman in terms of the PFRDA (Redressal of Subscriber Grievance) Regulations, 2015.

Details of the ombudsman are as given below:

Shri Narender Kumar Bhola

Pension Fund Regulatory and Development Authority

B-14/A, Chatrapati Shivaji Bhawan,

Qutab Institutional Area, Katwaria Sarai, New Delhi- 110016

Chhatrapati Shivaji Bhawan,

Email ID: ombudsman@pfrda.org.in

Landline No.: 011 -26517507 (Ext : 188)