Cash withdrawals from PPF, post office schemes: Income tax rules you should know

12 Mar , 2021 By : kanchan Joshi

The Department of Post has come up with new rules for deduction of tax deducted at source (TDS) in respect of aggregate cash withdrawal above Rs20 lakh by an account holder of National (Small) Savings Schemes, including Public Provident Fund (PPF). In case a recipient has not filed the returns of income for the previous three assessment years, new provisions in section l94N will be applicable from 1 July 2020 for non-ITR filer under section 194N of Income Tax Act 1961.

Department of Post: Here is all you need to know about the new TDS rules

1) For non-ITR filers: If aggregate cash withdrawal exceeds Rs20 lakh but does not exceed Rs1 crore during a financial year, the income tax payable will be 2% of the amount exceeding Rs20 lakh.

2) For non-ITR filers: If cash withdrawal exceeds Rs1 Crore during a financial year, the income tax payable will be 5% of the amount above Rs1 crore.

3) For ITR filers: If cash withdrawal exceeds Rs1 crore during a financial year. The income tax payable will 2% of the amount above Rs1 crore.

4) These changes are not yet incorporated and to facilitate Post Offices CEPT has identified and extract the details of such depositors for the period from 1 April 2020 to 31 December 2020.

5) CEPT will forward the list to concerned Circle/CBS CPCs of the concerned circles with details of the account, PAN number available along TDS amount to be deducted.

6) Incharge, CPC(CBS) of the circle shall forward the details to the respective Post office and take up for deduction of TDS from such customers/account without fail'

7) Respective Post Office will deduct TDS. The account holder should be informed of such a deduction in writing.

8) A voucher will be prepared and signed by the Postmaster concerned for the TDS amount, which will be forwarded to HO/SBCO along with other SB vouchers.

9)It is a regulatory provision and the concerned postmaster is personally responsible for the deduction of TDS as per rules.

10) Non-deduction of TDS may attract recovery/penalty.