TDS will be deducted on withdrawal of more than 20 lakh cash from post office in 1 year, this rule will also apply to PPF
People who have not filed ITR in the last 3 years will be more affected
A new section 194N was added to the Income Tax Act 1961
The Department of Posts has announced a new rule on source tax deduction (TDS). TDS will now be deducted on withdrawals of more than Rs 20 lakh from all post office schemes. The new rule will also apply to the Public Provident Fund (PPF).
New section added in
Income Tax Act A new section 194N has been added in Income Tax Act 1961. According to the provisions of this section, if an investor does not file an income tax return in the last 3 assessment years, TDS will be deducted on withdrawals. The new rule is expected to take effect on July 1, 2020. According to the provision, if a person does not file an ITR and withdraws more than Rs 20 lakh but less than Rs 1 crore in a financial year, TDS will be deducted at the rate of 2% on the amount above Rs 20 lakh.
Withdrawal of more than Rs 1 crore will be deducted at 5%.
If a person withdraws more than Rs 1 crore from all post office schemes in a financial year, TDS will be deducted at the rate of 5% on withdrawals exceeding Rs 1 crore. If a person files ITR and withdraws more than Rs 1 crore in a financial year, TDS will be deducted at the rate of 2% on the amount exceeding Rs 1 crore. These changes have not yet been implemented.
Identify the Depositors The Post Office
's Center of Excellence in Postal Technology will identify the Depositors of the Post Office to apply this rule of TDS deduction. The Excellence Center will provide information to all circles of the post office. This will include information such as depositors account and pen number. Apart from that the information of TDS amount deducted by the depositor will also be given by the Excellence Center. The concerned post office will deduct the TDS from the depositor and inform the account holder of this deduction.
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