08 January 2020
On my retirement I have drawn the full amount from NPS as the corpus is below Rs. 200000/= Please let me know the liability of income tax in this respect. I presume only 40 percent is taxable as per latest amendment. Kindly respond.
26 May 2020
Tax Treatment on withdrawal from NPS Withdrawal on retirement/at the age of 60 Withdrawal up to 40% of the accumulated wealth in NPS is exempt from tax at the time of retirement. However maximum amount that you can withdraw at the retirement is 60% of the accumulated wealth and balance 40% needs to be utilized for the purchase of annuity providing monthly pension to the subscriber.
Withdrawal from NPS before retirement (irrespective of the cause) If you want to withdraw from NPS before the age of 60 or before retirement (other than the purpose specified for partial withdrawal), the amount withdrawn will not be taxable but the amount that can be withdrawn is limited to only 20% of the accumulated wealth in NPS and balance 80% of the accumulated pension wealth has to be utilized for purchase of annuity providing for monthly pension of the subscriber. However the annuity income shall be taxable in the year of receipt as per the income tax slab rate applicable to the subscriber.
Withdrawal upon death of Subscriber The amount withdrawn in the event of death of subscriber shall be exempt from tax. The entire accumulated pension would be paid to the legal heir/nominee of the subscriber. However in case of govt employees, the entire amount cannot be withdrawn. Purchase of annuity plan is mandatory by the nominee.
d) 100% withdrawal at the time of retirement/attaining the age of 60: In case the total corpus in the account is less than Rs. 2 Lakhs as on the Date of Retirement (Government sector)/attaining the age of 60 (Non-Government sector), the subscriber (other than Swavalamban subscribers) can avail the option of complete Withdrawal.
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