The Pension Fund Regulatory and Development Authority (PFRDA) has recently came out with a master circular regarding the new rules that will govern partial withdrawal from the National Pension System (NPS)
Partial withdrawal from NPS?
Starting February 1, 2024, an NPS subscriber can withdraw from his pension account up to 25% of his contributions, according to the master circular released by the Pension Fund Regulatory and Development Authority (PFRDA) on January 12, 2024. Withdrawal cannot be made from the portion of the corpus contributed by the employer. The returns generated on the contributions will also not be eligible for partial withdrawal.
Reasons for partial withdrawal from NPS
Partial withdrawal from NPS is allowed for the following purposes, as mentioned by the PFRDA a) For children's higher education b) For children's marriage PFRDA has clarified that children include legally adopted children c) For the purchase or construction of the first house.
d) For the treatment of specified illnesses, including hospitalisation and treatment expenses for diseases such as cancer, kidney failure e) For medical and incidental expenses arising from the disability or incapacitation suffered by the subscriber. f) For NPS subscribers' skill development/re-skilling or any other self-development activities. g) For establishment of ventures or any startups by the NPS subscriber
How many times partial withdrawal is allowed in NPS?
1. Withdrawals from your NPS account are limited to a maximum of three times throughout the account's tenure. 2. There must be a gap of five years between the withdrawals. 3. However, this condition of a gap does not apply in case the withdrawal is being made for the treatment of a specified illness.
What will be the tax implication?
“Partial withdrawal is tax-exempt,”
How can you make partial withdrawal from NPS?
An NPS subscriber needs to submit the withdrawal request along with a self-declaration stating the purpose for the withdrawal. This submission has to be done to the central record-keeping agency (CRA) through the government nodal office or point of presence. In the case a subscriber suffering from any illness specified in the master circular is unable to submit the form because of the illness, the withdrawal request can be submitted by any family member.