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Understanding NPS Partial Withdrawal: Eligibility and Process
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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The National Pension System (NPS) is a government-regulated retirement savings scheme designed to secure financial stability post-retirement. One of its notable features is partial withdrawal, allowing subscribers to access a portion of their accumulated funds before retirement under certain conditions. Let’s learn about this feature in detail, along with the eligibility and the step-by-step procedure to avail of it.
Eligibility for NPS Partial Withdrawal
NPS Partial Withdrawal Process
Step 1: Determine Eligibility for Partial Withdrawal
Before initiating a partial withdrawal from NPS, ensure that you meet the eligibility criteria set by the NPS guidelines. Partial withdrawals are allowed for specific purposes, such as education, illness, marriage, house construction, or self-development, after a minimum specified period of continuous participation.
Step 2: Identify the Purpose of Withdrawal
Decide the reason for your partial withdrawal, as it needs to align with the predefined purposes outlined by the NPS guidelines. Draft a simple application mentioning the reason for partial withdrawal (no proofs required). The letter should be signed by the Subscriber.
Step 3. Login into subscriber’s NPS login
With the product enhancement, post July 2020 the entire Withdrawal process is now Online. Subscriber has to login to NPS portal cra-nsdl.com under the subscriber tab with 12 digit NPS PRAN as user ID and password can be set using reset via OTP (either on registered mobile number or registered email ID).
Step 4. Executing the request
Once logged in, under the Subscriber login click on Exit from NPS. Under the same, click on partial withdrawal. The system will automatically show 25% of the own contribution in calculation. Upload the draft application. Complete the OTP authentication. And then within the next 6-7 working days’ time the funds would be credited to the Subscriber bank account.
NOTE : Since this is Subscriber’s own contribution withdrawn, there is no tax incidence.
Conclusion
The NPS partial withdrawal feature offers flexibility to subscribers, allowing access to a portion of accumulated funds for specific needs pre-retirement. Understanding the eligibility criteria, purpose, compliance guidelines, and step-by-step withdrawal process is crucial to leverage this benefit effectively while securing financial stability post-retirement.
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