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Taxation Central Ministry of Finance Income Tax Act, 1961

Taxation Laws (Amendment) Act, 2025

21-Aug-2025 | No. 29 of 2025

Government of India has issues Taxation Laws (Amendment) Act, 2025 by amending the provision of Income-tax Act, 1961 effective from 1st April, 2025.

Highlight of the amendment:

- A new clause (12AA) has been added to Section 10 to provide an exemption for payments received from the National Pension System (NPS) Trust under the UPS. This clause provides that any amount received by a subscriber of the UPS, at the time of superannuation, voluntary retirement, or retirement under clause (j) of Rule 56 of the Fundamental Rules (where such retirement is not considered as a penalty under the Central Civil Services (Classification, Control and Appeal) Rules, 1965), will be exempt from tax to the extent it does not exceed 60% of the individual corpus.

- Further, a new clause (12AB) is added to Section 10 of ITA, which provides an exemption for any lump sum amount received on retirement. This exemption is allowed for the lump sum payment allowed to the central government employee on superannuation at the rate of 10% of monthly emoluments.

For more information, Kindly refer to the attached document.

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