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NPS withdrawal rules 2026: take up to 80% as a lump sum

Since December 2025, non-government NPS subscribers can take up to 80% at exit, and all of it below ₹8 lakh. The new rules, the tax catch and the charges.

By Saifu team · 5 October 2026 · 2 min read

In December 2025 the Pension Fund Regulatory and Development Authority (PFRDA) changed how subscribers who are not government employees can leave the National Pension System. The biggest change: far less of your money has to go into an annuity.

At normal exit

For All Citizen subscribers, normal exit is at 60 or after 15 years in NPS, whichever comes first; corporate subscribers exit at retirement. The old 5-year lock-in is gone.

• You can take up to 80% as a lump sum. At least 20% must buy an annuity, which pays a monthly pension. Before, it was 60% and 40%.
• If your corpus is ₹8 lakh or less, you can take all of it.
• Between ₹8 lakh and ₹12 lakh, you can take up to ₹6 lakh at once and the rest over at least 6 years, or as an annuity.
• You can stay invested until 85, up from 75.

Leaving early

If you leave before normal exit, 80% must buy an annuity and you can take 20%. If the corpus is ₹5 lakh or less, you can take it all.

Government employees

The split is unchanged: up to 60% as a lump sum, at least 40% into an annuity. The new small-corpus rules apply to them too: all of it if the corpus is ₹8 lakh or less, up to ₹6 lakh at once between ₹8 lakh and ₹12 lakh, and all of it on early exit if the corpus is ₹5 lakh or less. They can also stay invested until 85.

The tax catch

60% of the corpus taken at exit is tax free. The extra 20% that non-government subscribers can now take is, as the law stood in October 2026, added to your income and taxed at your slab rate. If you take 80% in one year, you could pay a lot of tax on that slice. Spreading withdrawals, or leaving that 20% invested, may cost less. The pension from the annuity is taxed every year as income.

Charges from 1 October 2026

Accounts opened through a bank or other point of presence now pay ₹200 at opening (₹100 if done fully online), recovered at ₹50 a quarter, plus 0.20% of the corpus a year and GST; the yearly charge also applies to existing accounts, but not dormant ones. Accounts opened and funded through e-NPS pay no point-of-presence charges, so opening online saves money.

Tax benefits while you save

• Your own contributions: an extra ₹50,000 deduction, in the old regime only (section 124 of the new Act, formerly 80CCD(1B)).
• Your employer's contributions: deductible up to 14% of salary in the new regime, and 10% in the old regime for private-sector staff. This is one of the few deductions the new regime allows.

Try your numbers in the NPS calculator, and compare with the EPF calculator.

Sources: PFRDA: key changes in the exit regulations, Business Standard: exit rule changes, Upstox: mandatory annuity cut to 20%, 1 Finance: tax on the new withdrawals, Upstox: charges from 1 October 2026.

NPS returns are market linked and not guaranteed. Saifu does not sell NPS or annuities.

Rules, rates and limits change. Check the official source linked above before you rely on a figure here. Posts never contain referral or affiliate links from the writer.

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