How to Close NPS Account

The National Pension System (NPS) is a long-term retirement savings scheme designed to provide financial security post-retirement. However, in certain situations, subscribers may wish to close their NPS account. This guide will explain the conditions, procedures, and key considerations for closing an NPS account.

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Reasons for Closing an NPS Account

1. Superannuation (Reaching 60 Years of Age) – Upon retirement, subscribers can exit the scheme and withdraw their accumulated corpus.
2. Premature Exit (Before 60 Years of Age) – Allowed under specific conditions.
3. Death of the Subscriber – The nominee or legal heir can withdraw the entire corpus.
4. Ineligibility or Regulatory Reasons – If the subscriber is no longer eligible to hold an NPS account.

Rules for Closing an NPS Account

• If the corpus is less than ₹5 lakh, the full amount can be withdrawn.
• If the corpus is above ₹5 lakh, at least 40% must be used to purchase an annuity, and the rest can be withdrawn.
• For premature exit, 80% of the corpus must be used for annuity purchase, and only 20% can be withdrawn as a lump sum.
• In case of death, the nominee can withdraw 100% of the corpus.

How to Close NPS Account Online

Step-by-Step Process

1. Log in to the NPS Portal
   • Visit the official NPS CRA website: NSDL CRA Portal or Protean eGov Portal.
   • Enter PRAN (Permanent Retirement Account Number) and password.
2. Go to ‘Exit from NPS’ Section
   • Click on the ‘Exit Request’ tab.
   • Select the reason for account closure (Superannuation, Premature exit, or Death).
3. Choose Withdrawal Option
   • Select how you want to receive your funds (lump sum or annuity-based).
4. Upload Required Documents
   • Identity proof (Aadhaar/PAN card).
   • Address proof.
   • Bank account proof (Cancelled cheque or passbook copy).
   • NPS Withdrawal Form (Annexure 302 for superannuation, Annexure 301 for premature exit, Annexure 303 in case of death).
5. Submit the Application
   • Confirm and authenticate the request using the OTP sent to the registered mobile number.
6. Processing and Fund Transfer
   • The request is reviewed and processed within 15-20 working days.
   • The funds are credited to the registered bank account.

How to Close NPS Account Offline

Step-by-Step Process

1. Download the Exit Form
   • Obtain the form from the NPS website or your Point of Presence (PoP).
2. Fill Out the Form
   • Provide PRAN, reason for closure, nominee details (if applicable), and withdrawal preference.
3. Attach Required Documents
   • Identity proof, address proof, and bank details.
4. Submit to the Nearest PoP or Nodal Office
   • The application will be reviewed and forwarded for final approval.
5. Processing & Fund Transfer
   • The corpus will be transferred to the registered bank account once the request is verified.

Important Considerations Before Closing NPS Account

• Tax Implications:
  • The withdrawn corpus (lump sum portion) is tax-free if withdrawn after 60 years.
  • If withdrawn before 60, the lump sum is taxable as per income slab.
• Annuity Purchase Requirement:
  • For amounts above ₹5 lakh, annuity purchase is mandatory.
  • Premature exits require 80% corpus allocation to an annuity provider.
• Processing Time:
  • Closing an NPS account takes 15-30 working days, depending on processing time.
• Nominee Role in Case of Death:
  • The entire corpus can be claimed by the nominee after submitting necessary documents.

Common Issues & Troubleshooting

• PRAN Not Recognized? – Ensure PRAN is correct and linked to your Aadhaar and PAN.
• Delayed Processing? – Contact CRA support or your Nodal Office for status updates.
• Mismatch in Documents? – Ensure all documents match registered details.

Final Thoughts

Closing an NPS account requires careful planning, especially considering tax implications and annuity obligations. If exiting due to superannuation, ensure you choose the right annuity provider for post-retirement income security. Those opting for premature exit must evaluate alternative retirement savings options before making a decision.

By following the step-by-step guide, you can efficiently close your NPS account while ensuring compliance with regulatory requirements and maximizing retirement benefits.