The Department of Post has released the new rules and regulations for subtracting tax deducted at source (TDS) on gross cash withdrawals of more than Rs 20 lakh by account holders of Small Savings Schemes, including the Public Provident Fund (PPF).
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 is all you need to know about Post Office saving schemes and new TDS rules
- In the case of non-ITR filers: If the gross cash withdrawal during a financial year crosses Rs 20 lakh but less than Rs 1 crore, the income tax due is 2% of the amount above Rs 20 lakh.
- In the case of non-ITR filers: If a cash withdrawal crosses Rs 1 crore in a fiscal year, an income tax of 5% of the amount above Rs 1 crore will be due.
- In the case of non-ITR filers: If in a financial year cash withdrawals surpass Rs 1 lakh. The amount above Rs 1 crore will be subject to a 2% income tax.
- These adjustments have not yet been implemented, but CEPT has defined and retrieved the specifics of such depositors for the term 1 April 2020 to 31 December 2020 in order to assist Post Offices.
- CEPT will provide the required details to the concerned Circle/CBS CPCs. 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.
- TDS will be deducted at the relevant Post Office. Such a deduction should be reported to the account holder in written format.
- The concerned Postmaster will prepare and approve a voucher for the TDS amount, which will be circulated to HO/SBCO together with other SB vouchers.
- As it is a regulatory requirement, the concerned postmaster is personally responsible for the deduction of TDS as per rules.
- Non-deduction of TDS can result in a penalty or recovery.