Good News for NSS Holders: No Need to Report Withdrawals in ITR for AY 2025-26 (If withdrawn after Aug 29, 2024)
Are you a senior citizen, or anyone, who holds a National Savings Scheme (NSS) account, specifically the NSS-87 Account? If you’ve made a withdrawal recently, you might be wondering about its tax implications. Here’s a crucial update that will bring you relief!
The short answer is: You generally don’t need to show your NSS withdrawal as income in your Income Tax Return (ITR) for Assessment Year (AY) 2025-26, provided you withdrew the amount on or after August 29, 2024.
Let’s break down why:
Why the Change?
Historically, deposits into the NSS were eligible for deductions, but withdrawals (including accrued interest) were taxable. However, the government has introduced changes to provide relief to NSS account holders:
- Interest Discontinuation: The government stopped interest payments on NSS balances after October 1, 2024.
- Tax Exemption for Withdrawals: To compensate for this, the Finance Act, 2025, amended Section 80CCA of the Income Tax Act. This amendment specifically exempts from tax any withdrawals made on or after August 29, 2024, from NSS deposits and their accrued interest.
- No TDS: Following this, the CBDT (Central Board of Direct Taxes) also issued a notification (No. 27/2025 dated April 4, 2025) stating that no Tax Deducted at Source (TDS) will be levied on these exempted NSS withdrawals. This means you won’t see any tax cut at the source when you withdraw.
What This Means for You:
If your withdrawal from your NSS (including NSS-87 Account) happened on or after August 29, 2024, you are not required to include this amount as “income from other sources” when you file your Income Tax Return.
Key Takeaway:
This is a significant relief, simplifying the tax filing process for those who have withdrawn their NSS funds recently.
When to File Your ITR?
You can start filing your ITR now. Please note that the due date for filing ITR for AY 2025-26 has been extended to September 15, 2025.
Important Note: This information is based on the latest notifications and amendments. For specific financial advice, always consult with a qualified tax expert.