Income Tax · NPS withdrawal
NPS Tier-1 withdrawal rules — at 60, early exit, and small corpus
✍️ Answered by EaseValue Advisors · Updated 17 Jul 2026
· 4-min read
Quick answer
At superannuation (60), you can take up to 60% of your NPS Tier-1 corpus as a tax-free lump sum and must use at least 40% to buy an annuity (the pension is taxable). Early exit needs 80% annuitised; a small corpus can be withdrawn in full.
At 60 / superannuation
- Up to 60% as a lump sum — tax-free.
- At least 40% must buy an annuity; the monthly pension is taxable as income when received.
- You can defer withdrawal or continue contributing up to 75.
Early exit (before 60)
After the minimum period, on premature exit you must put 80% into an annuity and can take only 20% as lump sum — the rules deliberately preserve the pension purpose.
Small corpus — full withdrawal
- At 60: if the corpus is up to ₹5 lakh, you may withdraw 100% as a lump sum (tax-free).
- Premature: if the corpus is up to ₹2.5 lakh, full withdrawal is allowed.
Partial withdrawal (while continuing)
After 3 years, you may take up to 25% of your own contributions for specified needs (illness, children's education/marriage, house) — tax-free. See NPS withdrawal exemption.
Tax on contributions
Separately, employer NPS (up to 14%) is deductible even in the new regime — see salary (new regime).
General information based on the Income-tax Act as it stands, not advice on your specific case. Tax outcomes
depend on your exact facts and residential status. © EaseValue Advisors LLP.
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