is premature withdraw from NPS by govt employees taxable
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Quick Summary
This discussion clarifies the tax treatment of premature withdrawals from the National Pension System (NPS) for government employees. While a portion of the withdrawal might be taxable, the rules regarding the 60% lump sum at retirement and the 20% limit for premature withdrawals (with the remainder used for annuity) are explained. It addresses concerns about potential double taxation on amounts covered under Section 80C.
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NPS before the age of 60 or before retirement (other than the purpose specified for partial withdrawal), the amount withdrawn will not be taxable but the amount that can be withdrawn is limited to only 20% of the accumulated wealth in NPS and balance 80% of the accumulated pension wealth has to be utilized for purchase of annuity providing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.
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