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The National Pension Scheme is a voluntary retirement scheme introduced by the Central Government. People can invest in such pension account regularly and receive 60% of it as a lump sum amount on attainment of 60 years of age and the remaining as annuity pension. However, the scheme also allows partial withdrawal from the NPS account. This article attempts to simplify the partial withdrawal rules and the tax benefits thereon.
Before we delve into the withdrawal rules, let’s understand some basics. There are two types of NPS accounts- Tier I and Tier II. If you wish to subscribe to NPS it is mandatory for you to open a Tier-I account. Tier-II is an add-on voluntary savings account to a Tier-I account holder with flexible rules.
There are such restrictions on withdrawals from Tier-II accounts. Also, there is no tax benefit on the contributions made to this account except in case of a central government employee. A central government employee can claim a tax deduction on his contributions to Tier-II account under section 80C up to Rs. 1,50,000 only if he completes a 3-year lock-in period.
However, partial withdrawal from a Tier-I account is possible only under certain circumstances.
The Pension Fund Regulatory and Development Authority (PFRDA) has specified the following as specified illnesses:
Calculate monthly Pension & Tax Benefits through Cleartax NPS Calculator
NPS ( National Pension Scheme ) – NPS Login, Scheme & Benefits of NPS