Check The New TDS Rules For PPF And Other Small Savings Schemes

Where an investor withdraws more than Rs 20 lakh from all post office schemes including PPF, the Department of Post has released new guidelines for deducting tax deducted at source (TDS). TDS will be withheld from the withdrawal balance if an investor has not filed income tax returns (ITR) for the previous three assessment years, as per the latest provisions of Section 194N of the Income Tax Act 1961. This latest statute is in effect from July 1, 2020. Know all about the new TDS standards below: If an investors overall cash withdrawals during a financial year cross Rs 20 lakh but do not exceed Rs 1 crore, and he is a non-ITR filer, TDS of 2% will be withheld from the amount surpassing Rs 20 lakh. If the gross cash withdrawal from all post office accounts in a financial year crosses Rs 1 crore, TDS of 5% will be levied on the amount in excess of Rs 1 crore.If you file an ITR, though, the rules are specific Where an ITR filers cash withdrawal in a financial year crosses Rs 1 crore. The amount above Rs 1 crore will be subject to a 2% of income tax.These updates are yet to be introduced. The Center for Excellence in Postal Technology (CEPT), a technology service partner for post offices, has reported and collected the specifics of such depositors for the term 1 April 2020 to 31 December 2020 in order to make it easier for Post Offices to deduct TDS.The necessary details will be forwarded to the Circle/CBS CPCs by CEPT. The CEPT will provide specifics such as the account number, account holders PAN number, and the amount of TDS to be deducted.The circles incharge, CPC(CBS), shall forward the specifics to the relevant Post Office and allow TDS deduction from such customers/accounts effectively without failure.TDS will be deducted at the depositors Post Office, and the account holder will be notified in writing of the deduction.The responsible Postmaster will organise and approve a voucher for the TDS amount, which will then be forwarded to HO/SBCO with other SB vouchers.Since it is a legal necessity, the responsible postmaster is solely responsible for deduction of TDS in conformity with the act.Non-deduction of TDS may result in penalty or recovery respectively.Advertisement Its worth remembering that some tax-saving initiatives require a minimum contribution per fiscal year in order for the account to remain operational. Public Provident Fund (PPF), National Pension System (NPS), and Sukanya Samriddhi Yojana (SSY) are some of the small saving schemes of post office that require a minimum deposit per fiscal year. Please, bear in mind that starting in FY 2020-21, a taxpayer can proceed to use the old/current tax regime and take advantage of current tax deductions. Alternatively, you can choose the new, more favourable tax regime, which excludes all existing tax breaks and deductions. Its worth remembering that even though you choose the current tax regime, you must make a minimum contribution to keep your account operational. To know how much you need to make a minimum contribution towards your PPF, NPS and SSY account are as follows: In a fiscal year, the minimum annual contribution to a PPF account is Rs 500. The deadline to make a contribution for this fiscal year is March 31, 2021, following which you will be charged a penalty of Rs 50 every year as well as a Rs 500 arrear subscription fee for each year in case you miss to make the minimum contribution. The account would be considered as inactive if the minimum contribution is not made during the financial year. In all of these scenarios, the PPF account holder will be unable to seek a loan or make partial withdrawals until the account is reactivated. Before the initial maturity date, a terminated account can be reactivated. It cant be revived after it reaches maturity, and it cant be closed until it reaches maturity. It is required to make a minimum contribution to a Tier-I NPS account per fiscal year if you have opened one. NPS tier-I allows a minimum contribution of Rs 1,000 in a financial year to keep the account functioning, according to existing regulations. If you fail to make the minimum contribution towards your NPS Tier-I account, it will become inactive. To reactivate your NPS account, you will be required to pay a penalty of Rs 100 per year, as well as make minimum contributions per year. For reactivating the NPS account, Point-of-Presence (POP) charges will be applied. Even though Tier II has no minimum contribution requirements, if the Tier I account is frozen, the Tier II account will be frozen as well if any. A minimum deposit of Rs 250 is required per financial year to keep the Sukanya Samriddhi Account active. The account would be considered as an inactive or frozen account if the minimum contribution is not made in a fiscal year. A dormant account can be reactivated before the 15-year period expires from the date it was opened. You will be required to make a minimum deposit of Rs 250, as well as a penalty of Rs 50 for each defaulted year, to get the account reactivated.