NPS Withdrawal: How can you withdraw money from NPS before and after retirement? Know how much money you will get and the complete process

NPS Withdrawal Process: If you have invested your hard earned money in National Pension System (NPS), then this news is very useful for you. The government has made some changes in the rules for withdrawing money from NPS. After this change, withdrawing money from NPS has become even easier and transparent. Let’s know how

How to Withdraw Money from NPS Account: National Pension System (NPS) is a scheme which is a great way to save money for retirement. Many times we need some money before retirement or we have to withdraw our deposited money after retirement. So let us tell you how you can withdraw your money from NPS in the year 2025.

NPS i.e. National Pension System is a government-backed scheme in which you deposit some money every month, and after retirement you get a lump sum amount and monthly pension. This scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). There are two types of accounts in it.

Tier-1: This is the main retirement account, which has strict withdrawal rules.

Tier-2: This is an alternative savings account in which withdrawal is easy but no tax benefit is available.

Today we will focus on Tier-1 withdrawal rules, as this is the main account and its rules are more important.

1.Partial Withdrawal Rules

Partial withdrawal from NPS account is possible only if the account is at least three years old. In this, you can withdraw only 25% of the amount deposited by you (excluding employer’s contribution). This facility is available maximum three times in the entire lifetime. Withdrawal is valid only for certain specific reasons,

such as higher education or marriage of children, purchase or construction of a house by oneself or with spouse (if there is no house already), treatment of critical illnesses (for pensioner, spouse, children, parents), medical expenses related to disability or accident, and for skill development or starting self-employment.

The withdrawal limit per time is only 25% of the amount deposited in that period. For example, if you have deposited a total of Rs 4 lakh in NPS, then the maximum amount you can withdraw at any one time is Rs 1 lakh and this can be done only three times.

Which documents are required?

• NPS Withdrawal/Exit Form
• Proof of Identity/Address
• Proof of bank account
• Copy of PRAN card

Now self-declaration will not work in online withdrawal. It is mandatory to upload all the documents.

How to do the online process

• Login to NPS CRA website (PRAN number and password)
• Go to ‘Transact Online’ tab, select ‘Withdrawal’
• Select the type of withdrawal you want to make: Partial, Superannuation, Premature (choose as per your choice)
• Fill the form, attach required documents (PAN, Aadhaar, bank details, nominee).
• Submit online. If filling offline then give the form to the nodal office/POP.
• The money reaches your account within three days.

Premature withdrawal
If you want to completely exit the National Pension System (NPS) before the age of 60, it is called premature withdrawal. The purpose of NPS is to save for retirement, so its rules are a little strict. For this withdrawal, your NPS account must be at least 5 years old. At the time of withdrawal, you can withdraw only 20% of your total corpus in lump sum, while with the remaining 80% amount you will have to buy an annuity plan, which will provide regular pension after retirement.

However, if your total corpus is less than Rs 2.5 lakh, you can withdraw the entire amount in lump sum, without buying an annuity. The process involves logging into the eNPS NSDL portal and selecting the Premature Withdrawal option, filling in your details and reason for withdrawal, and specifying the annuity plan. The system-generated form along with KYC documents and annuity-related papers need to be submitted to the nodal office or POP. Online submission option is also available.

Once the request is accepted, 20% of the amount is transferred to your bank account and the remaining 80% is invested in the annuity. This process can be completed in about 10 days. In terms of tax, there is no tax on the 20% withdrawn, but the pension received from the annuity is taxable as per your income tax slab.

Normal Withdrawal (Withdrawal at the time of retirement)
When you reach the age of 60, you can make a normal withdrawal from your NPS corpus, which is the most common and simple method. Though you can continue investing till the age of 75 if you wish, the withdrawal process can be started from the age of 60. In this case, you can withdraw 60% of your total corpus in a lump sum, while the remaining 40% is required to buy an annuity plan, which gives you a monthly pension. If your total corpus is less than Rs 5 lakh, you can withdraw the entire amount in a lump sum, without buying an annuity.

How to withdraw money?
The withdrawal process involves logging into the eNPS NSDL portal, selecting the Retirement or Superannuation option, entering the withdrawal amount and annuity plan details. After this, the system-generated form along with Aadhaar, PAN, cancelled cheque and annuity-related documents are to be submitted to the nodal office or POP. The option of online submission is also available.

Once the request is approved, 60% of the amount is transferred to your bank account and 40% is invested in the annuity. This process can be completed in about 10 days. As per tax rules, 60% of lump sum withdrawal is completely tax-free, while pension received from annuity is taxable as per your income tax slab.

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