Withdrawing cash from PPF, NSC? Know the TDS rules if you haven't filed ITR
The rates and limits depend upon whether the person withdrawing cash has filed ITR or not in three preceding assessment years for which time limit to file ITR has expired
The tax department has been collecting data from multiple sources in order to track down those people who are trying to avoid being taxed and are not filing income tax returns (ITR). To achieve the same objective, the government brought in a new regulation last year in the month of July under the Income Tax Act.
As per the Section 194N of the Income Tax Act if a person is withdrawing cash from small savings schemes including public provident fund (PPF), post office deposits, recurring deposit, national savings certificate, he or she is liable to pay TDS (tax deducted at source) at the rate of 2-5% if that person has not filed ITR in the previous 3 years.
“Where a person withdraws more than ₹20 lakh from all post office schemes including PPF, TDS will be withheld u/s 194N at 2% of aggregate amount if amount exceeds ₹20 lakhs but does not exceed ₹1 crore; or 5% of aggregate amount if amount exceeds ₹1 crore if the person has not filed income tax returns (ITR) for the previous three assessment years," said Amit Maheshwari, tax partner, AKM Global, a tax and consulting firm.
The rates and limits depend upon whether the person withdrawing cash has filed ITR or not in three preceding assessment years for which time limit to file ITR has expired.
“If you have filed ITR for any one of such 3 assessment years, then the TDS is not there for withdrawals upto ₹ 1 crore in a year and for cash withdrawals exceeding Rs. 1 crore, TDS rate is 2%," said Sujit Bangar, Founder Taxbuddy.com.
These TDS rules are applicable on cash withdrawal from banks, co-operative banks as well as post offices.
The tax department has launched a utility using which banks and post offices can verify if a person has filed ITR or not.
You can’t avoid this TDS even by submitting Form 15H/G, a declaration that your income is below the exempted limit.
“No option in this case, TDS shall be deducted in all cases of cash withdrawal above the ceiling of ₹20 lakhs or ₹1 crore whichever is applicable. Section 194N is not eligible for 15G/15H declaration or lower TDS deduction certificate under Section 197," said Tarun Kumar, a Delhi-based chartered accountant.