NPS withdrawal allowed now; don't make mistake, know this important rule first

The coronavirus outbreak is making people realise the importance of money and investments. The current situation has forced people to dig into their savings and emergency funds to meet their financial requirements. The government is also mending rules to allow easier access to cash. The Pension Fund Regulatory and Development Authority of India (PFRDA) said that NPS subscribers will now be allowed to make partial withdrawal for covering expenses related to the treatment of COVID-19.

In a circular addressed to all stakeholders and subscribers under the NPS, PFRDA said, "In view of the decision of the Government of India, which has declared COVID-19 as a pandemic, it has been decided to declare COVID-19 as a critical illness which is life-threatening in nature."

The withdrawal, however, comes with certain rules. And, the biggest question is how many times can you opt for it?

Well, partial NPS withdrawal can only be made three times during the entire tenure of your account. Under the existing rules of the national pension system, these partial withdrawals are completely tax-free.

NPS withdrawal online process

To withdraw your NPS money, you need to log in to your NPS account using the 12-digit Permanent Retirement Account Number (PRAN) and password to initiate an exit request. While there are some restrictions with respect to withdrawing from the tier 1 account, there are no restrictions on NPS Tier 2 withdrawals – you can initiate a withdrawal request on any business day.

The NPS subscribers can make a partial withdrawal after three years from the date of joining the system under specific circumstances. Withdrawal amount will not exceed 25 per cent of the contributions made by the subscriber.