Did You Know: When You Are Liable To Pay TDS On Saving Schemes

While you must be knowing that government notified saving schemes including the likes of post office savings account, national saving time deposit account, NSC, national savings RD account, MIS account, senior citizen savings scheme (SCSS), Sukanya Samriddhi, PPF, Kisan Vikas Patra also attract TDS deduction at the rate of 10% on the income from these investment avenues. Here is an important point that you cannot afford to ignore.

Did You Know: When You Are Liable To Pay TDS On Saving Schemes

Before this TDS as a concept came in to levy tax at the very source of income and it is the obligation of an individual towards the central government of the country. Herein the deductor or the person who has to make some specified stream of payment to another person (deductee) will deduct tax at source and deposit the same with the government.

The catch in TDS on savings schemes

Interestingly, as per section 194EE of the Income Tax Act, the person responsible for paying to any person any amount referred to in clause (a) of sub-section (2) of section 80CCA shall, at the time of payment thereof, deduct income-tax thereon at the rate of 10%. So, all of the government savings schemes mentioned above attract 10% TDS deduction.

But further in accordance with the details of the section, no deduction can be made as part of this section, where the amount of such payment or, as the case may be, the aggregate amount of such payments to the payee is less than Rs. 2500 in a financial year.

So, only if the gains from such schemes exceed Rs. 2500 in a financial year, you are liable to pay TDS on it.

GoodReturns.in