New Delhi: The Department of Post has issued new rules for deduction of tax deducted at source (TDS) if the aggregate withdrawal from all post office schemes is more than Rs 20 lakh by investors. This includes withdrawals from PPF also. 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 the new TDS rules:
1) If aggregate cash withdrawal by an investor exceeds Rs 20 lakh but does not exceed Rs 1 crore during a financial year and he is a non-ITR filer, then TDS @2% will be deducted from the amount exceeding Rs 20 lakh. In case total cash withdrawal from all post office accounts exceeds Rs 1 crore in one financial year then TDS @ 5% will be payable on the amount exceeding Rs 1 crore.
2) However, rules are different if you are an ITR filer. If cash withdrawal exceeds Rs 1 crore by an ITR filer in a financial year. The income tax payable will 2% of the amount above Rs 1 crore.
3) These changes have not yet been incorporated. In order to facilitate Post Offices to deduct TDS, the Center for Excellence in Postal Technology (CEPT), the technology solution provider to post offices, has identified and extracted the details of such depositors for the period from 1 April 2020 to 31 December 2020.
4) 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.
5) 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’
6) Respective Post Office of the depositor will deduct TDS and the account holder will be informed about the deduction in writing.
7) A voucher for the TDS amount will be prepared and signed by the concerned Postmaster following which it is forwarded to HO/SBCO along with other SB vouchers.
8) As it is a regulatory requirement, the concerned postmaster is personally responsible for the deduction of TDS as per rules.
9) Non-deduction of TDS may attract recovery/penalty.