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TDS on Payments in respect of Deposit under National Savings Scheme (NSC), etc. (Section 194EE)

  1. Who is liable to Deduct TDS under Section 194EE

  2. When TDS under Section 194EE is to be Deducted

  3. Rate of TDS under Section 194EE for the Financial Year 2018-19 and 2019-20

  4. When No TDS is Deductible under Section 194EE

Section 194EE was inserted with effect from October 1, 1991. Under this section, the person responsible for paying any amount referred to in clause (a) of sub-section (2) of section 80CCA will deduct income-tax thereon at the rate of 10% (20% up to May 31, 2016) at the time of payment.

(A) Who is liable to Deduct TDS under Section 194EE

The person responsible for paying to any person any amount standing to the credit of such person under National Savings Scheme (to which section 80CCA was applicable) together with interest accrued thereon, shall deduct income-tax thereon on such amount at the time of its payment.

TDS on Payments under National Savings Scheme (NSC) (Section 194EE)

(B) When TDS under Section 194EE is to be Deducted

It should be deducted at the time of its payment.

(C) Rate of TDS under Section 194EE for the Financial Year 2018-19 and 2019-20

Rate of TDS under Section 194EE will be 10%

  • For the financial year 2018-19, there is no Surcharge or Health and Education Cess, if the recipient is a Resident.
  • If recipient is Non-Resident, it will be increased by Surcharge or Health and Education Cess.
  • If the recipient does not furnish his PAN to the deductor, tax will be deducted at the rate of 20%.

    PAN of the deductee should be mentioned in any correspondence and document which is exchanged between the deductor and deductee.

(D) When No TDS is Deductible under Section 194EE

In the following cases, Tax is Not Deductible :

1. PAYMENT UP TO RS. 2,500 -

Where the amount of payment or the aggregate amount of payments in a financial year is less than Rs. 2,500, tax is not deductible under section 194EE.

2. PAYMENT TO LEGAL HEIRS -

Where the payment is made to the heirs of the deceased assessee (depositor), no tax shall be deducted at source.

3. DECLARATION TO THE PAYER IN FORM NO. 15G OR 15H [Section 197A]

If a declaration is submitted under section 197A by the recipient to the payer, then no tax is deductible in a few cases. The provisions of section 197A are given in the table :

 

Taxable Premature withdrawal from Provident Fund [Sec. 192A]

 Interest [Sec. 193 and 194A] or Rent [Sec. 194-I] or Insurance Commission [Sec. 194D]

 Dividend [Sec. 194]

Payment in respect of Life Insurance Policy [Sec. 194DA]

National Saving Scheme (NSC) [Sec. 194EE]

Condition 1 - Who is Recipient

individual

Other than a company or Firm

Resident individual

Other than
a company
or firm

Resident
individual

Condition 2- What is tax on total income of the previous year

Nil

Nil

Nil

Nil

Nil

Condition 3- How much is to

 

tal of income covered by sections 192A, 193. 194, 194k 194D, 194DA, 194EE and 194-I

Not exceeding the maximum amount not chargeable to tax.

Exemption limit for the financial year 2018-19 is Rs. 2,50,000

[ Higher Exemption Limit :

  1. in the case of a resident senior citizen born on or after April 2, 1939 but on or before April 1, 1959: Rs. 3,00,000; and

  2. in the case of a resident super senior citizen born on or before April 1, 1939: Rs. 5,00,000 ]

 

MODE OF SUBMISSION OF FORM No. 15G/15H BY THE RECIPIENT OF INCOME -

If the above conditions are satisfied, the recipient of income can submit Form No. 15G (for senior citizen Form No. 15H) to the payer of income. It can be furnished in paper format. Alternatively, it can be furnished electronically after duly verifying through an electronic process (the facility of electronic furnishing Form No. 15G/15H is provided on the website of different banks/payers). The declarant shall mandatorily quote his/her PAN in Form No.15G/15H in accordance with the provisions of section 206AA(2).

CONTENT-Tax Deducted at Source (TDS) [Section 190 to 206CA]

Related Topics....TDS (Tax Deducted at Source)

 
 

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