New rules for tax deducted at source (TDS) have been introduced by the Department of Post if the aggregate withdrawal from all post office schemes is above Rs 20 lakh by investors which also involves PPF withdrawals.
As per Section 194N of Income Tax Act 1961, TDS is deducted when an investor has not filed income tax returns (ITR) for the previous three assessment years and it has been applicable from July 1, last year.
Here’s a quick look at the new TDS rules:
1) A 2 % TDS will be deducted from the account after the cash withdrawal is more than 20 lakh but less than Rs 1 crore. Also, 5% TDS will be deducted if the amount exceeds Rs 1 crore.
2) Also if the cash withdrawal is more than Rs 1 crore, the income tax that will be given stands at 2% of the amount above Rs 1 crore.
3) However, these rules are not used for now. But the Center for Excellence in Postal Technology (CEPT), the technology solution provider to post offices, has taken all the details of such depositors from April 1, 2020, to December 31, 2020.
4) CEPT is supposed to give all the details regarding the depositors to the concerned Circle/CBS CPCs. This includes account, PAN number and the TDS amount to be deducted.
5) Incharge, CPC(CBS) of the circle will send in all the details to the respective Post office and take up for deduction of TDS
6) The Post Office of the depositor will deduct TDS and the account holder will be informed in writing.
7) A voucher will be made for the TDS amount and it will be signed by the concerned Postmaster and then it will be forwarded to HO/SBCO along with other SB vouchers.
8) Also, the concerned postmaster will be responsible for the deduction of TDS as per rules.
9) Non-deduction of TDS may attract recovery/penalty.