The Department of Post has previously established new regulations for the deduction of tax deducted at source (TDS) if an account holder’s total withdrawal from all post office schemes exceeds Rs 20 lakh.
TDS would be withheld from the withdrawal amount if the account holder has not submitted income tax returns (ITR) for the preceding three assessment years, according to new rules under Section 194N of the Income Tax Act of 1961. Check the new TDS rules on withdrawals from post office schemes including PPF below, which are in force from July 2020.Also Read:Open PPF Account in ICICI Bank Using iMobile Pay App, Here’s Step by Step Process
>> If an account holder’s total cash withdrawals surpass Rs 20 lakh but do not over Rs 1 crore in a fiscal year and he or she is a non-ITR filer, TDS at 2% will be charged from the amount surpassing Rs 20 lakh. If the total cash withdrawal from all post office accounts surpasses Rs 1 crore in a fiscal year, TDS at the rate of 5% will be levied on the amount in excess of Rs 1 crore.
>> That being said, if you are an ITR filer, the regulations are separate. If an ITR filer’s cash withdrawal in a fiscal year surpasses Rs 1 crore. TDS will be levied at a rate of 2% on the amount exceeding Rs 1 crore.
>> To assist Post Offices in deducting TDS, the Center for Excellence in Postal Technology (CEPT), a digital transformation distributor to post offices, has recognized and collected the credentials of such customers for the period 1 April 2020 to 31 December 2020.
>> CEPT will grant the necessary information to the Circle/CBS CPCs. The CEPT will disclose account information, the account holder’s PAN number, and the TDS amount to be withheld.
>> The circle’s head, CPC(CBS), will transfer the credentials to the appropriate Post office and, without delay, initiate TDS deduction from such customers or responsible accounts.
>> TDS will be deducted by the account holder’s relevant Post Office, and the account holder will be notified in a letter of the TDS deduction. The relevant Postmaster will generate and sign a certificate for the TDS amount, which will then be submitted to HO/SBCO together with other SB certificates. Because it is a legal obligation, the responsible postmaster is legally accountable for the deduction of TDS in accordance with the guidelines.
>>TDS non-deduction may result in a penalty or recovery according to the guidelines set by the Department of Post.
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