Most people join the National Pension System thinking, “I’ll deal with withdrawals later.” Then a real-life situation hits—education fees, medical bills, retirement planning—and suddenly the rules matter a lot. The good news? NPS Withdrawal Rules 2026 are more flexible than many assume, while still keeping your retirement money protected.
Here’s the thing. NPS isn’t meant to be a savings account you dip into whenever you want. It’s a retirement tool, regulated by PFRDA, built to make sure you don’t outlive your money. The withdrawal rules are structured to give you access when it truly matters, without letting you drain the corpus too early.
Why NPS Withdrawal Rules Exist in the First Place
Think about NPS like a long-distance train, not a local ride. If withdrawals were too easy, many people would exit early and reach retirement with little left. That’s why NPS allows limited access during service and full access mainly at retirement.
The balance is intentional. You get liquidity for genuine needs, but the system nudges you to stay invested for long-term income security.
Partial Withdrawal Rules During Service
After completing three years in NPS, you can make partial withdrawals. But there’s a cap.
You’re allowed to withdraw up to 25 percent of your own contributions only. Employer contributions and returns stay locked. Over your entire NPS tenure, you can do this a maximum of three times.
Here’s a quick overview of allowed purposes under NPS Withdrawal Rules 2026.
| Purpose | Maximum Withdrawal | Minimum Tenure | Frequency |
|---|---|---|---|
| Children’s higher education | 25% of own contribution | 3 years | Up to 3 times |
| Children’s marriage | 25% of own contribution | 3 years | Up to 3 times |
| Critical illness treatment | 25% of own contribution | 3 years | Up to 3 times |
| House purchase or construction | 25% of own contribution | 3 years | Up to 3 times |
| Skill or self-development | 25% of own contribution | 3 years | Up to 3 times |
If conditions are met, these partial withdrawals are tax-free. That’s a big relief when expenses are already high.
Full Withdrawal Rules at Retirement (Age 60 and Above)
At 60, you finally reach the main exit point. You can withdraw up to 60 percent of the corpus as a lump sum, and it’s completely tax-free. The remaining 40 percent must be used to buy an annuity, which gives you a regular pension.
There’s an exception many people don’t know about. If your total NPS corpus is below ₹5 lakh, you can withdraw the entire amount without buying an annuity.
Premature Exit Before Age 60
Life isn’t always predictable. If you exit NPS before 60 after completing five years, the rules tighten. At least 80 percent of the corpus must go into an annuity, and only 20 percent can be taken as lump sum.
If the total corpus is below ₹2.5 lakh, full withdrawal is allowed even on early exit.
Tax Treatment Under NPS Withdrawal Rules 2026
Lump-sum withdrawal up to 60 percent at retirement remains tax-free. Partial withdrawals for approved purposes are also tax-free. However, annuity income is taxed as per your income slab, so plan accordingly.
NPS rewards patience. The rules may feel strict at times, but they exist to protect your future income. Always double-check the latest updates on the official eNPS portal before making a withdrawal decision.
Frequently Asked Questions
Can I withdraw NPS money anytime in 2026?
No. NPS withdrawals are regulated. Partial withdrawals are allowed only after three years for specific purposes. Full withdrawal is mainly allowed at retirement, except in limited premature exit cases.
Is NPS partial withdrawal taxable?
If the withdrawal meets PFRDA conditions and approved purposes, partial withdrawals are tax-free. This applies only to your own contributions, not employer contributions or returns.
What happens if I don’t want an annuity at retirement?
An annuity is mandatory for at least 40 percent of the corpus at retirement. However, if your total NPS corpus is below ₹5 lakh, you can withdraw the entire amount without buying an annuity.