NPS Pre Maturity full exit taxation rules

If NPS corpus is below ₹5 lakh and full withdrawal is made before age 60:

• 60% of corpus is tax exempt

• 40% of corpus is taxable as per slab

Even though annuity is not mandatory, tax exemption remains limited to 60%.

As clarified by CBDT Circular No. 7/2018 dated 20.12.2018, where full withdrawal of accumulated corpus under NPS is permitted as per PFRDA regulations (small corpus cases), the entire amount so withdrawn shall be exempt under Section 10(12A) of the Income Tax Act, 1961.

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