NPS Corpus Thresholds 2025: Withdrawal Limits, Slabs & Smart Planning
Introduction The 2025 NPS rule change not only increased lump-sum withdrawal to 80% but also introduced corpus-based slabs that determine how much a subscriber can withdraw at retirement. Subscribers now need to understand: Corpus thresholds and the...
Introduction
The 2025 NPS rule change not only increased lump-sum withdrawal to 80% but also introduced corpus-based slabs that determine how much a subscriber can withdraw at retirement.
Subscribers now need to understand:
Corpus thresholds and their impact
Eligibility for 100% withdrawal
Mandatory annuity portions
Tax implications
Practical exit planning
This blog breaks it down clearly with examples and tables for FY 2025–26.
NPS Corpus Slabs After 2025 Reform
| Corpus at Retirement | Lump-Sum Allowed | Mandatory Annuity | Notes |
| ≤ ₹5 lakh | 100% | 0% | Full exit allowed, tax-free |
| \> ₹5 lakh & ≤ ₹8 lakh | 80% | 20% | Standard rule, partial annuity mandatory |
| \> ₹8 lakh & ≤ ₹12 lakh | Up to 80% | 20% | Tax planning required for extra portion |
| \> ₹12 lakh | Up to 80% | 20% | Higher corpus, careful tax planning needed |
How the Thresholds Affect Your Retirement Planning
Case 1: Corpus ≤ ₹5 Lakh
Full withdrawal allowed
No annuity required
Tax-free under current law
Ideal for early savers or short-term NPS contributors
Case 2: Corpus Between ₹5–12 Lakh
Maximum 80% withdrawal
Minimum 20% annuity required
Extra 20% taxable
Plan withdrawal in staggered years for tax efficiency
Case 3: Corpus > ₹12 Lakh
Same 80% withdrawal cap
Taxable component can be significant
Hybrid strategies recommended
Practical Example: Subscriber Retiring with ₹10 Lakh Corpus
| Component | Amount |
| Lump sum @ 80% | ₹8,00,000 |
| Tax-free portion (60%) | ₹6,00,000 |
| Taxable portion (extra 20%) | ₹2,00,000 |
| Annuity @ 20% | ₹2,00,000 → monthly pension |
Tax Implication
₹6L → Tax-free
₹2L → Added to taxable income
Annuity → Taxed annually
Planning Strategies by Corpus Size
≤ ₹5L Corpus: Consider full withdrawal; low tax impact
₹5–8L Corpus: Stagger extra withdrawal over 1–2 FYs
₹8–12L Corpus: Combine with other tax-saving investments (80C, 80CCD)
\> ₹12L Corpus: Plan annuity + staggered lump sum; professional guidance recommended
Benefits of Understanding NPS Corpus Slabs
Avoid unexpected tax burden
Plan annuity vs lump sum efficiently
Ensure sufficient retirement liquidity
Maximize estate planning potential
Align with personal risk appetite
Internal Links
NPS Rule Change 2025 — https://wondertax.in/contact-us/nps-rule-change
Retirement Planning India — https://wondertax.in/contact-us/retirement-planning
NPS Tax Benefits Explained — https://wondertax.in/contact-us/nps-tax-benefits
FAQ Schema
Q1: Can I withdraw more than 80% if corpus is ₹10 lakh?
No. Maximum lump-sum withdrawal is 80% unless total corpus ≤ ₹5 lakh.
Q2: Is annuity compulsory for corpus above ₹5 lakh?
Yes, minimum 20% annuity purchase is mandatory.
Q3: Can I stagger withdrawals to reduce tax?
Yes. Planning across FYs can optimize tax liability.
Q4: Does the corpus slab include Tier II account?
No. Tier II has different rules; this applies to Tier I retirement corpus.
Conclusion
Understanding the corpus thresholds is critical for smart NPS exit planning. By knowing who can withdraw what, subscribers can:
Minimize tax burden
Plan annuity effectively
Ensure retirement liquidity
Avoid mistakes that compromise financial security
With professional guidance from WonderTax, you can maximize your NPS corpus benefits under the 2025 rules.
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Optimized withdrawal strategy
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