NPS is a voluntary, defined contribution retirement savings scheme for Indian employees during their working life.
From now onwards, the National Pension Scheme (NPS) will allow withdrawal of amount not exceeding 25 per cent of the contributions made by subscribers to their individual pension accounts after a three-year lock-in period.
Untimely withdrawal will be allowed for purchase of house, treatment of critical illness, higher education and marriage of children. However, those who already own a residential space or flat, either individually or in joint name, other than ancestral property will not be allowed to withdraw. The list of critical illnesses includes cancer, kidney failure, coronary artery bypass graft, heart valve surgery and paralysis.
In case of a partial withdrawal before turning 60, 25 per cent of the contribution made will be exempted from income tax. Meanwhile, up to 40 per cent of the corpus withdrawn in the lump sum is exempt from tax when the subscriber attains the age of 60.
NPS is a voluntary, defined contribution retirement savings scheme for Indian employees during their working life. It has two types of accounts—Tier I and Tier II.
The Tier 1 account is non-withdrawable till the person reaches the age of 60 and now partial withdrawal of 25 per cent will be allowed subject to valid reasons for withdrawal.
The Tier II NPS account is similar to a savings account and subscribers are free to withdraw the money as and when they require.