Exemption from TDS on Withdrawals from NSS Accounts
On April 4, 2025, the Ministry of Finance's Department of Revenue, through the Central Board of Direct Taxes (CBDT), issued Notification No. 27/2025 (S.O. 1615(E)). This notification provides that, effective from its publication date in the Official Gazette, no tax shall be deducted at source (TDS) under Section 194EE of the Income-tax Act, 1961, on payments made to individuals withdrawing amounts from their National Savings Scheme (NSS) accounts.
Key Highlights:
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Exemption from TDS: Prior to this notification, under Section 194EE, TDS was applicable on withdrawals from NSS accounts if the amount exceeded ₹2,500. With this change, such withdrawals by individual assessees are now exempt from TDS, regardless of the amount.
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Effective Date: The exemption is applicable to withdrawals made on or after April 4, 2025, the date of the notification's publication in the Official Gazette.
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Relevant Provisions:
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Section 197A(1F): Empowers the Central Government to notify cases where TDS provisions will not apply.
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Section 194EE: Pertains to TDS on payments from NSS accounts.
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Section 80CCA(2)(a): Refers to contributions made to certain savings schemes, including NSS.
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This move aims to simplify the tax process for individual investors in the National Savings Scheme, ensuring that they receive the full benefit of their savings without immediate tax deductions at the time of withdrawal.
For further details, refer to the official notification on the Income Tax Department's website.