The Department of Posts has issued new rules for deduction of tax deducted at source (TDS) if the aggregate withdrawal from all post office schemes is more than Rs 20 lakh. The provision includes withdrawals from PPF as well.
As per the new provisions under Section 194N of Income Tax Act 1961, if an investor has not filed income tax returns (ITR) for the previous three assessment years then TDS will be deducted from the withdrawal amount.
This new rule is applicable from July 1, 2020.
Here are the details of the TDS rules:
- If aggregate cash withdrawal by an investor exceeds Rs 20 lakh but does not exceed Rs 1 crore during a financial year and he is a non-ITR filer, then TDS at the rate of 2 per cent will be deducted from the amount exceeding Rs 20 lakh. In case total cash withdrawal from all post office accounts exceeds Rs 1 crore in one financial year then TDS at 5 per cent will be payable on the amount exceeding Rs 1 crore.
- The rule is different for ITR filers. If cash withdrawal exceeds Rs 1 crore by an ITR filer in a financial year the income tax payable will 2 per cent of the amount above Rs 1 crore.
- The changes have not yet been incorporated. In order to facilitate Post Offices to deduct TDS, the Center for Excellence in Postal Technology (CEPT), the technology solution provider to post offices, has identified and extracted the details of such depositors for the period from April 1, 2020, to December 31, 2020.
- CEPT will provide the required details to the concerned circles. Details such as account, PAN number of the depositor and the TDS amount to be deducted will be provided by the CEPT.
- The respective Post Office of the depositor will deduct TDS and the account holder will be informed about the deduction in writing.
- A voucher for the TDS amount will be prepared by the concerned Postmaster following which it is forwarded to HO/SBCO along with other SB vouchers. As per the requirements, the postmaster is responsible for the deduction of TDS as per rules.