Is partial withdrawal from National Pension Scheme taxable? Find out here

By: | Updated: September 28, 2016 8:47 AM

The Direct Tax Dispute Resolution Scheme, 2016 is open till December 31, 2016 to all, including individuals. Tax litigation covered under the scheme pertains to cases pending before the Commissioner of Income-Tax (Appeal) as on February 29, 2016.

atal pension yojanaAs per Section 80CCD (3) of the Income-Tax Act, amounts standing to credit of the taxpayer in NPS account, for which a deduction has already been claimed by him and accretions to such account, shall be taxed as income on closure of the account or his opting out of the said scheme.

As per Section 80CCD (3) of the Income-Tax Act, amounts standing to credit of the taxpayer in NPS account, for which a deduction has already been claimed by him and accretions to such account, shall be taxed as income on closure of the account or his opting out of the said scheme. When a subscriber withdraws 25% from NPS, he is neither closing his NPS account nor is he opting out. There will be no taxation at the time of partial withdrawal of 25%, which is allowed in certain specific cases.

Income Tax
I had offered capital gains tax on sale of a plot of land based on actual sale consideration rather than stamp duty value, which is higher. The Assessing Officer made addition based on the stamp duty value and currently the case is pending before the CIT (A). The AO will initiate penalty proceeding against me. I have heard about a dispute resolution scheme where a person can settle his tax dispute. What should I do? —Akash Kumar

The Direct Tax Dispute Resolution Scheme, 2016 is open till December 31, 2016 to all, including individuals. Tax litigation covered under the scheme pertains to cases pending before the Commissioner of Income-Tax (Appeal) as on February 29, 2016. If an individual pays tax and interest payable till the date of assessment, he can save on interest cost as interest is payable only till the date of assessment (against interest payable till the date of payment in normal case). He also gets relief from penalty against penalty exposure of 100-300% in normal case (however, 25% penalty amount to be paid, if tax amount exceeds R10 lakh) and immunity from prosecution. Based on this, decide whether to continue with litigation or settle the dispute.

The writer is founder of RSM Astute Consulting Group

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