Most guides still teach 60/40 and the ₹5 lakh limit. Those rules are gone for private subscribers — but the tax law hasn't caught up, and that gap costs money.
Short answer: since December 2025, a private-sector (All Citizen / Corporate) subscriber exiting at 60 can take up to 80% as lump sum with only 20% buying an annuity; a corpus up to ₹8 lakh can be withdrawn in full. Government subscribers stay on the older 60/40 split. The trap: the tax exemption still covers only 60% of the corpus — the extra 20% you may now withdraw is taxed at your slab until the law is amended.
PFRDA (Exits and Withdrawals under NPS) Regulations, effective December 2025 · Tax treatment per current provisions · Indicative, as of August 2026
| Corpus at exit | What you can do |
|---|---|
| Up to ₹8 lakh | Withdraw 100% as lump sum — no annuity required (or take it in phases via SLW/SUR) |
| ₹8–12 lakh | Up to ₹6 lakh as lump sum; the balance via Systematic Unit Redemption over at least 6 years, or an annuity |
| Above ₹12 lakh | Up to 80% lump sum; at least 20% into an annuity |
Government subscribers remain on the classical rule for larger corpora: up to 60% lump sum, at least 40% annuity — with the same small-corpus reliefs at the bottom.
The exemption in the tax law still says 60% of the corpus is tax-free on exit. PFRDA now lets you withdraw 80% — but the slice between 60% and 80% is, under current provisions, taxable at your slab. On a ₹60 lakh corpus, that slice is ₹12 lakh of taxable income landing in one year. Two clean defences: take only 60% as lump sum and leave the rest annuitised or deferred; or spread the taxable slice across years using Systematic Lump-sum Withdrawal (SLW) — the new regime's ₹12 lakh rebate can absorb a lot of it for a retiree with no salary. Until the tax law is amended to match, 80% is a right, not automatically a good idea.
Premature exit (before 60, or under 15 years of subscription for voluntary exits) still forces at least 80% into an annuity, with only 20% in hand — unless the corpus is ₹5 lakh or less, which can be taken in full. NPS remains an instrument that punishes early departure by design; liquidity before 60 has to live elsewhere in your plan.
You can now stay invested and defer exit to age 85 (up from 75). Partial withdrawals during accumulation widen to four, each up to 25% of your own contributions. And the phased-payout machinery — SLW for the lump-sum share, SUR for units — turns the exit from a single irreversible day into a schedule you control. For anyone whose NPS corpus is the backbone of retirement, the deferral-plus-SLW combination is the real headline, not the 80%.
The annuity must be bought from a PFRDA-empanelled insurer at exit. Rates differ meaningfully across providers and variants (with/without return of purchase price, single/joint life) — and the annuity income is fully taxable at slab. Compare quotes across providers on the day; the default option in the exit form is not priced to be the best one. For where an annuity sits in a full income plan, see the ₹1 crore ladder.
Private-sector subscribers: up to 80% as lump sum with 20% to an annuity; 100% if the corpus is ₹8 lakh or less; ₹6 lakh plus phased payout for ₹8–12 lakh corpora. Government subscribers remain on 60/40.
No — only 60% of the corpus is exempt under current tax provisions. The extra 20% PFRDA now permits is taxable at your slab until the tax law is amended; SLW can spread that hit across years.
At least 80% must buy an annuity and at most 20% comes as lump sum, unless the corpus is ₹5 lakh or less (full withdrawal). Voluntary premature exit also requires 15 years of subscription for non-government members.
Yes — the December 2025 rules allow staying invested to age 85, and the lump-sum share can be taken gradually via Systematic Lump-sum Withdrawal instead of on one day.
Related: NPS basics · ₹1 crore income ladder · EPS pension
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Written and checked by the PaisaSamajh editorial desk · Last reviewed: 24 August 2026 · How we check this →