TDS be deducted on cash withdrawals from post office schemes

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 tax deducted at source (TDS) will be deducted from the withdrawal amount.

The new rule is applicable from July 1, 2020.

As per the provisions, 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 at the rate of 2 per cent 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 at 5 per cent will be payable on the amount exceeding Rs 1 crore.

If you are an ITR filer and cash withdrawal exceeds Rs 1 crore by an ITR filer in a financial year the income tax payable will 2 per cent of the amount above Rs 1 crore.

The 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 April 1, 2020, to December 31, 2020.

CEPT will provide the required details to the concerned circles. Details such as account, PAN number of the depositor and the TDS amount to be deducted will be provided by the CEPT.

The respective Post Office of the depositor will deduct TDS and the account holder will be informed about the deduction.