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NPS maturity & partial withdrawals — tax-free (Income-tax Act 2025; old 10(12A)/(12B))

✍️ EaseValue Advisors · Updated 17 Jul 2026 · FY 2025-26
In short

At exit, up to 60% of your NPS corpus taken as a lump sum is tax-free, and eligible partial withdrawals are exempt too — Income-tax Act 2025 (old Section 10(12A)/(12B)).

What's exempt

  • 60% lump sum at superannuation/exit — fully tax-free.
  • Partial withdrawals up to 25% of your own contributions for specified needs (illness, children's education/marriage, house) — exempt.

The other 40%

Must be used to buy an annuity; that purchase isn't taxed now, but the pension you later receive is taxed as income in the year of receipt.

Regime note

These are exemptions on receipts, so they apply regardless of the old or new regime. (The contribution-stage deductions differ — see employer NPS, Section 124, old 80CCD(2), which survives in the new regime.)

Who it helps

Every NPS subscriber planning their retirement drawdown.

The law behind it
Income-tax Act 2025 (old 10(12A)/(12B)) Section 124 (old 80CCD(2))
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General information for FY 2025-26 (AY 2026-27), not advice on your specific case. Limits, rates and conditions change with each Finance Act and depend on your facts — confirm before acting. © EaseValue Advisors LLP.
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