Rule 15 — NPS Rules
Original Rule Text
15. Conditions for withdrawal from Tier-I. Following conditional are required to be fulfilled before withdrawal from Tier-I account:
a. Subscriber should be in NPS at least for 3 years; b. Withdrawal amount will not exceed 25% of the contributions made by the Subscriber; c. Withdrawal can happen maximum of three times during the entire tenure of subscription. d. Withdrawal is allowed only against the specified reasons, for example: i. Higher education of children; ii. Marriage of children; iii. For the purchase/construction of residential house; iv. For treatment of Critical illnesses.
What This Means
Partial withdrawals from the Tier-I account are allowed, but only under strict conditions. The subscriber must have been enrolled in NPS for at least three years. The amount that can be withdrawn must not exceed 25% of the total contributions made by the subscriber (excluding the government's contributions). This facility is available a maximum of three times during the entire period of NPS subscription.
Withdrawals are allowed only for specific, defined purposes. These include higher education expenses for children, marriages of children, purchase or construction of a residential house, and treatment of critical illnesses. These restrictions exist to prevent premature depletion of retirement savings and to ensure the corpus remains substantial at the time of actual retirement.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Minimum 3 years of NPS subscription required before any partial withdrawal.
- 2Withdrawal is capped at 25% of the subscriber's own contributions (government contributions excluded).
- 3Maximum three partial withdrawals allowed in the entire NPS tenure.
- 4Permitted purposes: higher education of children, marriage of children, purchase/construction of a house, critical illness treatment.
- 5No withdrawal is allowed for purposes outside this defined list.
Practical Example
Suresh Nair joined NPS in 2012. By 2023 (11 years of subscription), he has contributed Rs 15 lakh of his own money (government has added Rs 21 lakh). His daughter needs Rs 3 lakh for a postgraduate programme. Suresh can apply for a partial withdrawal of up to Rs 3.75 lakh (25% of Rs 15 lakh). Since Rs 3 lakh is within the 25% cap and the purpose (higher education of child) is a permitted reason, his application is approved. This counts as his first of three allowed partial withdrawals.
Five years later, he again needs funds for his son's wedding. He can apply again, provided the amount still stays within 25% of his cumulative contributions at that point. His third and final partial withdrawal can be used later for another qualifying reason.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
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This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.