The Department of Posts has issued new rules regarding the deduction of TDS on withdrawals from Post Office Schemes. If the total withdrawal from all post office schemes undertaken by the investor is more than Rs 20 lakh, then the new TDS deduction rule will apply. It also includes withdrawal from PPF.
As per the new provision under Section 194N of the Income Tax Act 1961, if an investor has not been filing Income Tax Return (ITR) for the last three assessment years, TDS will be deducted from the withdrawal amount. The new rule is effective from July 1, 2020. Let us know about this new TDS rule.
If the total withdrawal by an investor in a financial year is more than Rs 20 lakh but does not exceed Rs 1 crore and does not fill the ITR, then TDS will be deducted by 2 per cent on the amount exiting over 20 lakh
If the total withdrawal from all post office accounts is more than one crore in a financial year, then TDS will be deducted by 5 percent on the amount coming out of more than one crore.
At the same time, if you fill the ITR, then there are different rules for you. If a person filing an ITR withdraws more than one crore rupees in a financial year, 2 percent income tax will have to be paid on the amount coming out of more than one crore.
This withdrawal of TDS will be done by the concerned post office of the depositor and the account holder will be informed in writing about this deduction. This is a regulatory requirement, so as per the rule, the postmaster concerned is personally responsible for deduction of TDS. Non-deduction of TDS may lead to recovery or penalty. It is the responsibility of the Center for Excellence in Postal Technology (CEPT) to help TDS deduction to various post offices. CEPT provides post technology support to the post offices.