NPS being a market-linked vehicle, its maturity proceeds should be subject to capital gains taxation. As NPS units are not chargeable to securities transaction tax, long-term capital gains will apply if they are held for 3-years plus and short-term capital gains, if held for a shorter period. The long-term capital gains tax rate would be at 20% with indexation benefits. I am of the view that the deducted tax amount will be refunded by ITR filing. Under Section 115BAC of the Income Tax Act, 1961, deductions under Chapter VI-A cannot be claimed except Section 80CCD(2) and 80JJAA.

Source: The Hindu July 18, 2021 16:52 UTC