Business News Desk, National Pension System (NPS) is the best option for savings for post-retirement expenses. This is a government scheme, due to which investment in it is completely safe. By investing in it, a huge fund is created in the long run, which is very useful after retirement. Apart from this, there is also regular income in the form of pension every month. But, these benefits are available after the subscriber turns 60 years of age. Therefore, many people do not invest in NPS, because they feel that the money deposited in NPS will not be of use to them if they need money in between. But it is not true. Withdrawal from NPS is allowed before the subscriber turns 60 years of age. Let us know what are the terms and conditions for this.
1. Partial Withdrawal
The subscriber is allowed to withdraw some money only after three years of opening the NPS account. The condition is that the subscriber can withdraw 25 percent of his total contribution. This will not include employer’s contribution. PFRDA has allowed withdrawal of 25 percent contribution in certain circumstances. For treatment: The subscriber can withdraw money for the treatment of himself, his wife/husband or children. But, this money can be withdrawn only for the treatment of serious diseases like cancer, kidney and heart disease. It is important to note that the subscriber is allowed three partial withdrawals during the NPS period. There should be a gap of at least 5 years between one withdrawal and the other.
2. Premature Exit
If for some reason the subscriber wants to withdraw money from NPS before the age of 60 years, then he can withdraw the money after 10 years of opening the account. But, there are some conditions for this. This means that if the subscriber wants to withdraw his money after 10 years, then he will have to use 80 percent of the total fund created to buy annuity. With this, he will get pension every month, which is the main purpose of investing in NPS.
3. Exit on death before 60 years
If the subscriber dies before the age of 60 years, his nominee or legal heir can withdraw the entire money deposited in NPS in lump sum. In such a situation, there is no need to buy annuity. With this, the subscriber’s family gets the entire amount in lump sum.
4. How much will be the tax?
It is important to understand the tax rules applicable to withdrawal of money before the stipulated time. Partial withdrawal from NPS corpus i.e. up to 25 per cent is tax-free. If the subscriber wants to withdraw the entire amount before the stipulated time, then 20 percent tax will be charged on the lump sum amount. Keep in mind that in case of premature withdrawal of the entire amount, only 20 percent of the amount is allowed to be withdrawn in lump sum. You will have to buy annuity with the remaining money. The pension received from annuity will be taxed as per the income tax slab of the subscriber. From the above rules for withdrawal of money before completion of 60 years of age, it becomes clear that PFRDA has allowed the subscriber to withdraw money if necessary. . But, it has also kept in mind that the main objective of the subscriber to invest in NPS should be regular income after retirement.
