NPS Withdrawal Process: Current All Citizen Exit Rules

NPS withdrawal rules depend on the subscriber sector, the type of exit and the accumulated pension wealth. This guide focuses on the current non-government All Citizen model and should not be applied automatically to government-sector or other NPS exit tables.

Normal exit for the All Citizen model

Normal exit applies after 15 years of subscription or on attaining age 60, whichever is earlier under the current All Citizen framework.

• The general route permits up to 80% lump sum and at least 20% annuity.
• At corpus up to ₹8 lakh, 100% lump sum, systematic lump-sum withdrawal, systematic unit redemption or another approved option can be available.
• Above ₹8 lakh and up to ₹12 lakh, the regulations provide specified lump-sum, systematic payout and annuity alternatives.

This replaced the former universal 60% lump-sum / 40% annuity description for All Citizen normal exits.

Premature voluntary exit

An All Citizen exit before the normal vesting condition generally permits up to 20% lump sum and requires at least 80% annuity. Where corpus is up to ₹5 lakh, full lump-sum or other approved payout options can be available.

Premature exit is different from a partial withdrawal. A partial withdrawal keeps the Tier I account open and is subject to its own purpose, contribution-base, frequency and interval rules.

Death of an All Citizen subscriber

For the All Citizen model, 100% lump-sum payout is permitted on death. The regulations also allow specified systematic or annuity options. Nomination, legal-heir and claim-document requirements still need to be satisfied.

Starting the claim

The subscriber or claimant initiates the request through the applicable Central Recordkeeping Agency, Point of Presence or nodal process. Bank details and the documents required by the current operational guidelines must be supplied. The available options shown in the claim flow should be checked against the subscriber sector and exit reason before submission.

Choosing an annuity

An annuity purchase is a separate contract with an empanelled Annuity Service Provider. Available variants, payout rates, spouse continuation and return-of-purchase-price features differ. A calculator assumption is not a live annuity quote, and a selected annuity may have limited cancellation rights beyond the applicable free-look terms.

Tax treatment

PFRDA exit permission does not determine the entire tax result. Current income-tax guidance exempts up to 60% of the total NPS corpus on closure or opting out under Section 10(12A). Therefore, an All Citizen subscriber permitted to take up to 80% as lump sum should not assume the full 80% is tax-exempt. Annuity receipts are taxed under the law applicable when received.

Partial withdrawals can have a separate exemption up to the statutory contribution-based limit when regulatory conditions are met. Tax treatment should be checked for the actual exit and assessment year.

Illustrative scenario

Illustrative scenario: an All Citizen subscriber with ₹20 lakh at normal exit can choose the general 80/20 route, meaning up to ₹16 lakh lump sum and at least ₹4 lakh for annuity. This illustrates the current exit split only. It does not state that the whole ₹16 lakh is tax-free or estimate the pension an insurer will quote.

Key points

• Current All Citizen normal exit uses up to 80% lump sum and at least 20% annuity, subject to corpus alternatives.
• Premature voluntary exit generally uses up to 20% lump sum and at least 80% annuity, with a corpus-based exception.
• Death and partial-withdrawal rules are separate from normal and premature exit.
• Tax exemption can be narrower than the amount PFRDA permits as lump sum.

Common mistakes

• Using an old PFRDA FAQ that still states 60/40 instead of the amended rules.
• Applying All Citizen rules to government-sector or another subscriber model.
• Treating a permitted lump sum as automatically tax-free in full.
• Choosing an annuity from a planning assumption instead of current provider terms.

What to do next

Confirm the subscriber model, exit reason, corpus band and current tax treatment before initiating the claim.

Primary sources checked

• PFRDA: NPS All Citizen model
• PFRDA: Exit and Withdrawal Regulations, last amended 20 July 2026
• Income Tax Department: exempt-income provisions

Rules and tax references checked on 8 October 2026.