Introduction
Any person responsible for paying to any person any amount standing to the credit of such person under the National Savings Scheme (to which Section 80CCA applied), together with interest accrued thereon, shall deduct an amount equal to 10% at the time of payment of such sum.
Who must deduct TDS under Section 194EE?
The person responsible for paying to any person any amount standing to such person’s credit under the National Savings Scheme (to which section 80CCA applied) together with interest accrued on such amount shall deduct income tax on such amount at the time of payment.
When does TDS become non-deductible under Section 194EE?
Tax is not deductible under Section 194EE in the following circumstances:
● When a payment or the total amount of payments in a fiscal year is less than Rs. 2,500.
● When a payment is made to the heirs of a deceased assesse (depositor), the recipient must submit a declaration to the payer under Section 197A.
TDS rate
Section 194EE requires TDS to be deducted at the rate of:
● 10% on payment of amount standing to such person’s credit under National Savings
Scheme (No Surcharge or Cess)
● 20% (if recipient does not provide PAN) – Section 206AARate provided in the lower WHT certificate obtained under Section 197 (Not Applicable)
What are the Exceptions to TDS Not Being Deductible?
TDS is not deducted under section 194EE in the following circumstances:
● If the payment is less than Rs. 2,500
● When the amount is less than Rs. 2,500, the tax on payment is not deductible.
● When the payment is made to the assesses legal heirs TDS will not be charged when the payment is made to an heir due to the assesses death.
Form 15G or 15H declaration to the payer [section 197A]
If the recipient submits a declaration in form 15G or 15H to the payer under section 197A, the tax on source is not deducted.
What is the Section 197A declaration?
Section 197A allows any individual who is not a firm or a company to apply for an exemption from TDS deduction on his or her income from interest on deposits with Indian banks if the income is less than the taxable limit.
● Individuals under the age of 60 can submit a declaration using Form 15G, according to Section 197A.
● Individuals over the age of 60 (senior citizens) can use Form 15H to submit their applications.
● Furthermore, it is required to submit a declaration of TDS exemption on their interest income.
● These forms can also be used to request TDS exemption on EPF withdrawals, insurance commission earned rental income, and income from corporate bonds and post-employment benefits.
TDS on Deposit Payments Under NSS
194EE, Section 194EE TDS on Deposit Payments Under NSS 194EE The person responsible for paying to any person any amount referred to in clause (a) of sub-section (2) of section 80CCA shall deduct income tax at the rate of 10% at the time of payment:
Except where the amount of such payment or as the case may be, the aggregate amount of such payments to the payee during the fiscal year is less than two thousand five hundred rupees
No deduction shall be made under this section:
Furthermore, nothing in this section shall apply to the payment of the said amount to the assesses heirs.