New Delhi: The Department of Posts has issued new TDS rules if the aggregate cash withdrawal from all post office schemes is more than Rs 20 lakh. The provision includes withdrawals from PPF also.
As per the modified 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 tax deducted at source (TDS) will be deducted from the withdrawal amount.
According to the Finance Act 2020, the new rule is applicable from July 1, 2020.
As per the provisions, if aggregate cash withdrawal by an investor exceeds Rs 20 lakh but does not exceed Rs 1 crore during a financial year and he/she 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.
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If you are an ITR filer and 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.
The Section 194N was inserted in the Income Tax Act 1961 through the Finance Act, 2019.
According to the original provisions, only cash withdrawal exceeding Rs 1 crore attracted 2 per cent TDS starting from September 1, 2019.
Also, there was no distinction between ITR and non-ITR filers.
(With IANS Inputs)
