December 2025 NPS changes: A big step forward, but read the fine print
Published by Moneycontrol
Abhishek Kumar's role: Quoted
Abhishek Kumar suggested estimating extra income needs from expenses, inflation and life expectancy and drawing it through a systematic withdrawal plan. He cautioned that NPS should be pledged for a loan only as a last resort.
What Abhishek Kumar said
How could I reduce tax on the larger NPS lump sum allowed under the December 2025 rules?
When the new rules allowed 80% of the corpus to be taken as a lump sum, the tax exemption still covered only 60%, so the extra 20% was taxable at slab rates. I suggested spreading the withdrawal of that extra 20% across several years. If adding the NPS withdrawal to a year's income keeps you in a lower tax bracket, spreading it out can reduce your overall tax liability.
How should I plan a regular income from my NPS lump sum after retirement?
I suggest starting from your current expenses, the inflation you expect during retirement and your life expectancy. Use these to estimate the additional amount you will need over and above your annuity income. Then set up a systematic withdrawal plan that draws this additional amount regularly over your lifetime, so that your expenses are met throughout retirement.
Should I take a loan against my NPS corpus?
Pledging NPS as collateral should be done very carefully, so that it does not dent your long-term retirement corpus. It is meant for a genuine emergency or a need that comes once in a lifetime, not for discretionary spending, because what you borrow out of it may never be fully put back. If you cannot service or repay the loan, your retirement is directly at risk. So I treat borrowing against NPS as an exception, to be used only after every other option is exhausted, never as a habit.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on retirement
The article reviews the December 2025 NPS changes, including a larger lump-sum withdrawal, a smaller compulsory annuity, gold and silver ETF options and loans against the corpus. It flags that tax law still exempts only 60% of the lump sum and urges careful planning of withdrawals.
Publisher source
December 2025 NPS changes: A big step forward, but read the fine print