Partial withdrawal from the National Pension System (NPS) account has been created feasible by the Pension Fund Regulatory and Development Authority (PFRDA) by way of an on the internet course of action also. Industry authorities, nevertheless, recommend one really should not be encouraged to withdraw from the retirement fund unless there is an emergency.
Even although partial withdrawal is feasible, account holders can make a partial withdrawal from their NPS fund only following they have completed 3 years. Additionally, there is also a limit to how a great deal can be withdrawn. A subscriber can withdraw up to 25 per cent of their personal contributions. For instance, if you have invested Rs 6 lakh in your NPS account, you will only be in a position to withdraw Rs 1.5 lakh, which is 25 per cent of your personal contributions.
Earlier NPS did not enable partial withdrawals, but now partial withdrawals can be created but only for particular purposes, such as for child’s marriage or education, illness or disability, buy of a home, and so forth. Also, preserve in thoughts that there are limits on the quantity of instances partial withdrawals can be created. Only 3 partial withdrawals in the all round tenure of an account can be created.
Further, among two withdrawals there need to be a gap of 5 years. However, if the withdrawal is getting created for the remedy of a specified illness, then this situation of a gap does not apply.
How to make a withdrawal from your NPS account?
To make a withdrawal, the account holder is not necessary to submit an application at a nodal workplace or point of presence, with documents substantiating the causes for partial withdrawal. In the on the internet application rather, the account holder can just make a self-declaration, and the income will get transferred into their bank account on the 5th day.
Tax remedy of NPS withdrawal quantity
Industry authorities say partial withdrawal is tax-exempt. However, if you exit your NPS account prematurely, that is just before 60 years of age, the tax remedy will be diverse. In that case, you will be permitted to withdraw only up to 20 per cent of your corpus as a lump sum, even though the balance 80 per cent will have to be annualised.
Keep in thoughts, even although the lump-sum quantity will be exempted from tax, earnings from the annuity will be added to your earnings and taxed at the slab price.