Withdrawals from National Pension Scheme (NPS) is taxed. Is it fully taxed or only capital gains are taxed? Also, will buying an annuity attract service charge?
- Meenu Chadha
If you are withdrawing the money after you have turned 60, you must compulsory use 40 per cent of the money to buy an annuity to secure a monthly pension. You can withdraw the rest of the money in a lumpsum. This money is taxed as per the Income Tax slab applicable to you. If you are withdrawing the money before you are 60, you have to use 80 per cent of the corpus to buy an annuity and you can withdraw the remaining 20 per cent as a lumpsum.
Are you talking about Service Tax on annuity purchase? Annuity purchases will attract service tax at a rate prevailing at that time.