Top Stories FM Nirmala Sitharaman proposes Income Tax Exemption to Withdrawals from National Savings Scheme in Budget 2025 The changes are aimed to provide greater predictability to multinational enterprises to formulate a compliance protocol most suitable for them By Avinash Kurungot – On February 2, 2025 11:41 am – 2 mins read The Union Budget 2025-26 was presented by Finance Minister Nirmala Sitharaman in the Lok Sabha today (1 February, 2025).
In a major relief to depositors of the National Savings Scheme (NSS), Finance Minister Nirmala Sitharaman announced an income tax exemption on withdrawals from the scheme in the Union Budget 2025-26. Finance Minister Nirmala Sitharaman in her key-note address stated that “It is proposed to provide exemption to the withdrawals made from National Savings Scheme (NSS) on or after the 29th day of August, 2024, for any amount deposited under the scheme and the interest accrued thereon in respect of which a deduction has been allowed,” Get Complete Coverage on Budget 2025-26, Click Here
Presently, Section 80CCA of the Income Tax Act, 1961 provides deductions for amounts deposited in the NSS, with any withdrawals from the NSS being considered taxable income if the depositors had previously claimed deductions. Read More: Budget 2025: Two Self-occupied Property Conditions Exempt from Income Tax, Says FM The Department of Economic Affairs issued a Notification dated 29.08.2024 providing that no interest would be paid on the balances in the NSS after 01.10.2024. Representations were received to suitably amend section 80CCA to provide relief to individuals facing hardship who were compelled to withdraw as a result of this Notification. Get Complete Coverage on Budget 2025-26, Click Here The NSS-87 scheme was introduced in 1987 and remained active until its discontinuation in 1992. Subsequently, a new series, NSS-92, was launched in 1992 but was later discontinued in 2002.
Since then, no additional NSS schemes have been introduced. Under NSS-87, depositors are permitted to make one withdrawal per year, whereas NSS-92 imposes no restrictions on the number of withdrawals. Read More: Exempt Income of Non-Residents: FM proposes Section 10 Amendment in Union Budget 2025 Through the changes proposed by the Union Budget 2025-26, individuals withdrawing their NSS funds on or after August 29, 2024,.shall be exempt from income tax on the withdrawn amount. Having retrospective application, the exemption shall apply to all withdrawals made from August 29, 2024. Read More: Income Tax Dept Specifies Conditions for TDS Exemption on Purchases from IFSC Units u/s 194Q