The Buyt Desk
National Pension Scheme(NPS) is a government-run pension scheme. It was started in 2004 for government employees and then in 2009, it was opened for all the salaried personnel, professionals and even businessmen. The subscriber of NPS contributes regularly to a pension account during his/her working life. When the subscriber reaches the age of 60 he/she can withdraw 60% of the corpus which will be tax-free. But the rest of the 40% of the corpus should be utilised mandatorily for buying an annuity plan. The 40% of the corpus will serve as a regular pension and will be taxed as per your income slab.
NPS Tier I Withdrawal Rule
The NPS account matures at the age of 60. But if there is a sudden requirement of money and you have funds in your NPS account then it can come to your rescue. But remember you can make a partial withdrawal and that too in the framework of rules. Let us have a look at the rules that you need to follow if you want to withdraw from your NPS –
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Partial withdrawals can be made only for specified reasons such as medical treatment, marriage, higher education of children, purchase and construction of the property or starting your own business.
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During the lifetime of your NPS, you are allowed to make 3 partial withdrawal and such withdrawals can be made only after 3 years of account opening.
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An NPS investor can withdraw only 25% of his contribution portion. That is, the calculation for partial withdrawal will be done only on that part of the total amount to which the investor has contributed.
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The calculation for partial withdrawal will be only on that portion of the total amount contributed by the investor. The additional interest earned on the amount will not be counted for partial withdrawal.
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There should be a gap of 5 years between two partial withdrawals. In case of a medical emergency, this gap is pardoned.
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Partial withdrawal can be applied by logging in online. The online application can be made for partial withdrawal. Subscriber can fill up the Partial Withdrawal Form (601-PW) and submit it to the Point of Presence service provider along with the required documents.
Premature Closure of NPS
If the subscriber wants to exit NPS before the completion of 60 years of age he/she can do so. They are allowed to withdraw only 20% of the corpus and have to mandatorily put 80% of the money in the annuity plan. If the accumulated amount is less than 1 lakh then in such a situation 100% of the money can be withdrawn. If the investor dies, then the entire money is given to the nominee.
