5% Tax To Be Deducted From PPF Cash Withdrawals, Other Small Saving Schemes (New Rules)
There have been new rules set for deduction of TDS or tax deducted at source for an aggregate withdrawal from all post office schemes above Rs 20 lakh for an investor, as issued by the Department of Post.
This includes withdrawals from PPF too.
In fact, according to new provisions under Section 194N of Income Tax Act 1961, any investor who has not filed ITR for the past three years, will have their TDS deducted from the withdrawal amount.
This rule has come into application from July 1, 2020.
TDS to be Deducted For ITR & Non-ITR Filers
For a non-ITR filing investor,
- If the aggregate cash withdrawn exceeds Rs 20 lakh but not Rs 1 crore in one financial year, the TDS will be charged at 2% from the outstanding amount.
- If the aggregate cash withdrawn from all aggregate cash withdrawn is more than Rs 1 crore for one FY, the TDS charged will be at 5%.
For an ITR-filing investor,
- If the aggregate cash withdrawn is over Rs 1 crore in a financial year, the income tax payable will be 2% of the amount.
All the Details Related to New TDS Rules
- The Center for Excellence in Postal Technology (CEPT) has identified and extracted the details of non-TDS filing investors from April 1, 2020 to December 31, 2020.
- It will then provide these details to the CPCs of the respective circles.
- The incharge CPC of the circle will forward these details (like account, PAN number of the depositor and the TDS amount deducted) to the respective Post office.
- These post offices will deduct TDS and the account holder will be informed about the deduction in writing.