Learn all about the TDS rules on withdrawals from the PPF and other post office programs
The Post Office previously established new regulations for withholding tax deduction (TDS) if an account holder’s total withdrawal from all post office programs exceeds Rs 20 lakh. The TDS would be withheld from the withdrawal amount if the account holder has not submitted income tax returns (ITRs) for the previous three tax years, in accordance with the new rules in Section 194N of the Act. 1961 income tax. See the new TDS rules on withdrawals from postal regimes including the PPF below, which are in effect from July 2020.
- If the total cash withdrawals of an account holder exceed Rs 20 lakh but do not exceed Rs 1 crore in a fiscal year and he or she is not an ITR filer, TDS at 2% will be charged. on the amount exceeding Rs 20 lakh. If the total cash withdrawals from all postal accounts exceed Rs 1 crore in a fiscal year, TDS at the rate of 5% will be charged on the amount exceeding Rs 1 crore.
- That being said, if you are an RTI filer, the regulations are separate. If the cash withdrawal from an ITR filer during a fiscal year exceeds Rs 1 crore. The TDS will be charged at a rate of 2% on the amount exceeding Rs 1 crore.
- To help post offices infer TDS, the Postal Technology Center of Excellence (CEPT), a digital transformation distributor for post offices, recognized and collected the credentials of these customers for the period of April 1, 2020 to December 31, 2020.
- The CEPT will provide the necessary information to the CPCs of the Circle / CBS. CEPT will disclose account information, the PAN number of the account holder and the TDS amount to be withheld.
- The circle manager, CPC (CBS), will transfer the credentials to the appropriate post office and, without delay, initiate the TDS deduction of those responsible customers or accounts.
- The TDS will be deducted by the relevant post office from the account holder, and the account holder will be notified by mail 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 along with other SB certificates. Because this is a legal obligation, the responsible postmaster is legally responsible for deducting TDS according to guidelines.
- Failure to deduct TDS may result in a penalty or recovery according to guidelines set by the Post Office.
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Article first published: Friday, June 18, 2021, 9:56 a.m. [IST]