Section 194EE: TDS on Payments in respect of Deposits under National Savings Scheme

By | January 11, 2016

Section 194EE deals with tax deducted at source on payment in respect of deposits under National savings scheme. Where any payment is made by a person of an amount referred to in clause (a) of sub-s. (2) of S. 80CCA, then such person is required to deduct tax @ 20% there on at the time of making such payment. The amount standing to the credit of an assessee under National Saving Scheme, 1987 and the interest accrued thereon is covered under this provision.

However, in following cases no tax is deductible:

a) where amount so payable in a financial year is less than Rs.2500/- or

b) where payment is made to heirs of a deceased assessee or

c) where in case of resident individual, no tax is payable if tax on estimated total income of the previous year including such withdrawal would be nil and a declaration by him is furnished to that effect in form 15-I and verified in prescribed manner by the person responsible for such payment.

Person Responsible to Deduct Tax:Post office
Category of Payee:Individuals and HUF
Rate of Deduction of Tax:20%
No TDS:Amount of payment in aggregate not exceeding Rs.2500/- or payment is made to the heirs of the assessee.
Time for Deduction of Tax:At the time of the payment.
Time for Deposit of TDS:In case of deduction by or on behalf of Government, on the same day.
Other cases- within 1 week from the last day of the month of tax deduction.
TDS Certificates to be issued in:Form 16A
e-TDS Return to be filed in?Form 26Q


As Per Section 194EE, of the Income Tax Act, 1961-

After section 194E of the Income-tax Act, the following section shall be inserted, with effect from the 1st day of October, 1991, namely:—

Payments in respect of deposits under National Savings Scheme, etc.

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 twenty per cent:

Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to the payee during the financial year is less than two thousand five hundred rupees:

Provided further that nothing contained in this section shall apply to the payment of the said amount to the heirs of the assessee.

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