Tax Benefits NPS Subscribers
Tax-exemption for partial withdrawal from NPS
The existing provision of section 10(12A) of the Income Tax Act, 1961 provides that payment from National Pension System (NPS) to At the time of normal exit, 40% of the total corpus is mandatorily required to be purchased for annuity. a subscriber on closurer of his account or opting out shall be exempt up to 40% of total corpus at the time of withdrawal .
The amount utilized for purchase of annuity is also tax exempt. The subscriber has the option to use higher amount for purchase of annuity. In order to provide further relief to the subscriber of NPS, it has been proposed to provide exemption on partial withdrawal not exceeding 25% of the contribution made by an employee in accordance with the terms and conditions specified under Pension Fund Regulatory and Development Authority Act, 2013 and regulations made there under.
This benefit will be effective on partial withdrawal made by the subscriber after 1st April 2017
Source :www.irtsa.net
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