NPS Small Corpus? New Rules Let You Skip The Annuity

Tax changes add to the calculation. Many taxpayers have shifted to the new tax regime, which does not offer the additional deduction for NPS contributions under Section 80CCD(1B). For subscribers who no longer get that benefit and have built only a modest balance, the incentive to keep the account running has weakened, the columnist wrote.

There is still one advantage to buying an annuity through NPS. No goods and services tax applies on the purchase. Outside NPS, GST is payable on the annuity premium. For a small corpus, that benefit is dwarfed by the low pension payout. For larger accounts, the tax saving can be meaningful.

The revised rules do not force anyone out. Subscribers with a larger corpus can keep the account, defer exit, withdraw a portion and buy an annuity with the rest, or stop new contributions while letting the balance grow. The right choice depends on the subscriber's overall retirement income, not just the NPS balance, the columnist said.

The column's author, a business journalist specializing in insurance and corporate history, framed the change as an opportunity to rethink, not an invitation to exit. Retirement planning is not only about accumulating investments. It is also about knowing when to simplify them. If the NPS account has become a small holding that no longer offers tax benefits and adds little to retirement income, this may be the right time to decide whether it still deserves a place in the portfolio.