Income-tax Act, 1961Section 10(12A) / 10(12B)
- 10(12A): 60% of NPS corpus on closure/exit exempt
- 10(12B): partial withdrawal up to 25% of own contributions exempt
Applies to FY 2025-26 (AY 2026-27) and earlier years.
IT Act 1961 → 2025 / Section 10(12A) / 10(12B)
ExemptionsSection 10(12A) / 10(12B) → Schedule II
Tax-free NPS withdrawals: 60% lump sum and partial withdrawal
Section 10(12A) / 10(12B) of the old Income-tax Act, 1961 · new Schedule II under the Income-tax Act, 2025
New reference Schedule II, Table Sl. No. 6 (NPS closure); Schedule III, Sl. No. 4 (partial withdrawal)
Income-tax Act, 2025Schedule II, Table Sl. No. 6 (NPS closure); Schedule III, Sl. No. 4 (partial withdrawal)
- Closure/exit: up to 60% exempt — Schedule II, Sl. No. 6
- Partial withdrawal: Schedule III, Sl. No. 4
- Annuity receipts remain taxable (section 124(6))
Applies from tax year 2026-27 (from 1 April 2026).
What changed
Moved into the Schedules; limits unchanged.
Practice notes
- NPS deductions themselves are in section 124 (old 80CCD).
Frequently asked
Is NPS withdrawal tax free under the new Income Tax Act 2025?
Up to 60% of the corpus on closure is exempt under Schedule II, Sl. No. 6; partial withdrawals under Schedule III, Sl. No. 4.
What is section 10(12A) / 10(12B) called in the new Income-tax Act, 2025?
Section 10(12A) / 10(12B) of the Income-tax Act, 1961 corresponds to Schedule II, Table Sl. No. 6 (NPS closure); Schedule III, Sl. No. 4 (partial withdrawal) of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).
What changed in section 10(12A) / 10(12B) under the new Income Tax Act?
Moved into the Schedules; limits unchanged.
Is section 10(12A) / 10(12B) still applicable for FY 2025-26?
Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 10(12A) / 10(12B) of the 1961 Act. Schedule II, Table Sl. No. 6 (NPS closure); Schedule III, Sl. No. 4 (partial withdrawal) of the 2025 Act applies from tax year 2026-27.