IT Returns: Even though the government has withdrawn the announcement of a change in interest rates of small savings schemes in the last few days, new rules have come for people investing in these schemes. The Government of India has implemented the new TDS Act on Small Saving Schemes. TDS will be deducted if investors withdraw money from post office schemes, PPF account for more than Rs 20 lakh and are not filing ITR for three consecutive years.
If you withdraw money of more than Rs 20 lakh from the post office saving schemes in the financial year, then your TDS will be deducted by 2 percent. If they withdraw more than one crore rupees, then 5% TDS will be deducted. This rule came into effect from July 1, 2020, after amendment of section 194N of the Income Tax Act 1961.
According to the tax experts, PPF and post office schemes will no longer be misused due to this rule. There are a large number of people who open PPF accounts in the name of their family members to avoid tax. And these people do not file income tax returns.
But the new TDS has been revised in such a way that more and more people fill the returns. At the same time, this rule will also put pressure on taxpayers to pay taxes. There are a large number of people who do not show interest earned in tax returns.