If you withdraw NPA money in an emergency, then you lose many types of facilities at once. If you want, you can withdraw a lumpsum 20% of NPS, but it is taxed. The NPS money will be taxed according to the tax slab you fall in.
EPF and NPS are schemes in which money is invested for a long-term goal. Like retirement planning or child’s education or marriage, both these schemes play a big role in this. But its advantage is only if it is kept for a long time and money is deposited over a fixed period. The advantage of the deposit is that it works like a lifesaving in an emergency. You can work by withdrawing the money deposited in schemes like EPF and NPS. But is it worth withdrawing money from it?
Technically the answer is no. Investment means that the goal for which it has been started, should be carried out. But when it comes to very adverse circumstances, then by withdrawing money from these schemes, you can run the work. In such a situation, you should also know about the disadvantages that one has to suffer due to premature withdrawal of money from EPF or NPS.
Withdraw money only in difficult times
According to experts, PF money should be withdrawn only when the matter is very serious. There is no option left except to withdraw the money of PF, then only hand should be put in it. If you withdraw PF money for marriage or building a house, then what will happen to the situation which breaks on the head as a big disaster. PF money should be saved in anticipation of that day. According to a figure, your PF money can double every 8 years if you invest wisely. But if you start withdrawing that money instead of investment, then who will say double key, even his principal amount will not be saved.
will not get the benefit of compound interest
Doubling of PF money is called compound interest. If you withdraw money, you will be deprived of the facility of compounding. If you do not withdraw PF money, then there will definitely be so much money in hand on retirement that life will be cut with respect. You will not have to think about small to big expenses. You get two options when withdrawing PF money. Either deposit that money again or take that money forever.
Often people make mistakes and spend PF money. If you think that you can repay the PF money, then withdraw it, otherwise take another loan. You may get tax exemption on that loan. But in PF this facility is available only on maturity amount.
NPS withdrawal loss
Something similar happens with NPS as well. If you withdraw NPA money in an emergency, then you lose many types of facilities at once. If you want, you can withdraw a lumpsum 20% of NPS, but it is taxed. The NPS money will be taxed according to the tax slab you fall in. The remaining 80 percent will have to be mandatorily deposited in an annuity plan. On the basis of this money, you will get pension later.
If you do not withdraw NPS money, there is a rule of getting 60 percent money on maturity. The remaining 40% is deposited in the annuity. If you withdraw the money before time, then 20% amount will be received and the remaining 80% will go to the annuity.