The old 60/40 summary is no longer enough
PFRDA’s current NPS All Citizen page reflects major exit changes: normal exit after age 60 or the applicable 15-year vesting condition can allow up to 80% lump sum with at least 20% annuity for the general case, with special small-corpus options up to ₹12 lakh. Premature exit generally allows up to 20% lump sum with at least 80% annuity, with a full-withdrawal option for corpus up to ₹5 lakh. Partial-withdrawal frequency was also expanded under the current framework.
What to establish before an NPS exit
- Use the July 2026 amended PFRDA regulations, not older 60/40 FAQs.
- Normal All Citizen exit: up to 80% lump sum, at least 20% annuity in the general case.
- Premature exit: up to 20% lump sum, at least 80% annuity, subject to small-corpus exception.
- Partial withdrawals have updated frequency/interval rules.
Current All Citizen exit snapshot
| Exit situation | Current broad rule to check |
|---|---|
| Normal exit | Up to 80% lump sum; at least 20% annuity, with special options for smaller corpus. |
| Premature exit | Up to 20% lump sum; at least 80% annuity; corpus up to ₹5 lakh can have a full-payout option. |
| Death | 100% lump sum permitted, with approved options available. |
| Partial withdrawal before 60 | Up to four times with a four-year interval under the updated framework, subject to purpose/amount rules. |
Why older NPS articles can now be wrong
Many older NPS pages still state a universal 60% lump sum / 40% annuity split at normal exit. PFRDA’s current All Citizen page and regulations amended through 20 July 2026 show the updated 80%/20% framework and small-corpus options. Always use a current PFRDA source when publishing an NPS exit article.
Small-corpus rules matter
The current All Citizen page provides specific options for corpus up to ₹12 lakh at normal exit, including full-payout or systematic options in defined bands. These are not merely “rounding” exceptions; they can change whether an annuity is required.
Withdrawal permission and tax exemption are separate
PFRDA’s current All Citizen rules can permit up to 80% of the corpus as a lump sum in the general normal-exit case. The Income Tax Department’s current NPS guidance, however, states that final withdrawal is exempt under section 10(12A) only up to 60% of the corpus. A regulatory permission to withdraw up to 80% should therefore not be described as meaning that the entire 80% is automatically tax-free. Verify the tax law in force on the actual exit date before choosing the lump-sum percentage.
Partial withdrawal is not a free cash account
Partial withdrawal remains subject to eligibility, permitted purposes, percentage limits and intervals. The updated frequency does not turn NPS into an unrestricted savings account. Preserve documentation for the permitted purpose and use the latest PFRDA operational process.
Match the rule to sector, exit type and corpus
NPS exit treatment depends on why you are exiting, the subscriber category and the corpus at exit. Check the current PFRDA table for normal exit, premature exit, death and partial withdrawal rather than relying on an older 60/40 summary. Corpus thresholds can also change whether full lump-sum withdrawal or phased options are available.
Where NPS exit planning goes wrong
- Relying on an older 60% lump-sum/40% annuity summary without checking the current regulations.
- Treating a permitted lump-sum percentage as though the same percentage were automatically tax-exempt.
- Ignoring small-corpus options that can materially change the exit route.
- Using All Citizen rules for a subscriber category with different provisions.
- Treating partial withdrawal as unrestricted access instead of checking the purpose, amount and interval conditions.
Model the corpus before choosing an exit mix
Frequently asked questions
Is NPS normal exit still always 60% lump sum and 40% annuity?
No for the current All Citizen framework. PFRDA now shows up to 80% lump sum and at least 20% annuity in the general normal-exit case.
Can I take 100% if corpus is small?
Current PFRDA rules provide special full-payout/systematic options at defined small-corpus levels. Check the exact band at exit.
What is premature exit?
It is an exit before satisfying the normal-exit age/vesting condition; the general split is more annuity-heavy.
How many partial withdrawals are allowed?
The updated framework provides up to four before age 60 with interval conditions, and separate post-60 rules.
Are NPS exit rules the same for every sector?
No. Government, corporate and All Citizen cases can differ. This article focuses on the current All Citizen model.