TDS on Payments in respect of deposits under National Savings Scheme, etc

As per section 194EE: 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 ten 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.

Summary of Section 194EE of the Income Tax Act
  • Deductor/ Payer: Any person
  • Deductee/ Payee: Any person (whether Resident or Non-Resident)
  • Nature of Payment: Any amount standing to the credit of such person under National Savings Scheme (to which section 80CCA was applicable) together with interest accrued thereon.
  • Threshold Limit: 2,500/- or more
  • Rate of TDS:
    • TDS is required to be deducted @ 10 %
    • If recipient is a 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 @ 20%.
  • Time of deduction: At the time of payment
  • No TDS is required to be deducted:
    • If aggregate of the amounts of such income paid during the financial year is less than Rs. 2,500/-.
    • If payment made to the heirs of the deceased assessee then no TDS shall be deducted