Reena (Partner) (221 Points)
11 January 2018My mother invested Rs 50,000 during the last 3 yearsin NPS to save tax. Her corupus is less than 2 lakh so she can withdraw the full amount. She is already retired.
So if we withdraw the full amount now, say Rs1.6 lakh, what percentage of it will be taxable income? The only rules i could find were in the case when some amount is used to buy super-annuity but not when the full amount is withdrawn.
Please help regarding this. Thanks.
Amitav
(Chartered Accountant)
(5993 Points)
Replied 11 January 2018
As per Budget 2017 partial withdrawals from NPS will be tax free.
Before this partial withdrawals were taxable.
PFRDA (Pension Fund regulatory and development authority) allows the Partial withdrawal from NPS up to 25% of contribution made by subscriber.
However partial withdrawal is allowed subject to fulfillment of certain conditions as below:
• The Partial withdrawal shall be allowed for specific purposes such as higher education of children, marriage of children, purchase or construction of residential house or for treatment of specified diseases.
• Individual should have subscribed to NPS for at least 10 years.
• Maximum of 3 withdrawals during the entire tenure are allowed.
• Minimum gap of 5 years is required between the two withdrawals. However, this condition shall not apply in case of withdrawal for treatment of specified illness.
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.
GST Live Certification Course (39th Batch) - April 2024 (Weekend Batch) (With Certificate)
"Live class on Python for Financial Analysis: Unlocking Efficiency in Accounting and Finance"
CAclubindia
