NO TDS on Withdrawals from National Savings Scheme

Exemption from TDS or NO TDS on Withdrawals from National Savings Scheme (NSS) – NOTIFICATION No. 27/2025

S.O. 1615(E).—In exercise of the powers conferred by sub-section (1F) of section 197A of the Income-tax
Act, 1961 (43 of 1961), the Central Government hereby specifies that no deduction of tax shall be made under section 194EE of the Act on payment of amount referred to in clause (a) of sub-section (2) of section 80CCA, which is withdrawn by an assessee being an individual, on or after the date of publication of this notification in the Official Gazette.

Explanation:

1. Section 194EE: This section mandates a 10% TDS deduction on payments made from the National Savings Scheme (NSS) if the withdrawal exceeds ₹2,500 in a financial year.
2. Section 80CCA(2)(a): It relates to deposits made under the National Savings Scheme or similar notified schemes.
3. Section 197A(1F): It gives the government the power to exempt certain payments from TDS.

Impact of the Notification:

• Before this notification: If an individual withdrew money from the National Savings Scheme (NSS), TDS at 10% was deducted if the withdrawal exceeded ₹2,500.
• After this notification: No TDS will be deducted on such withdrawals, provided the individual is the account holder.

Example:

Case Before Notification

• Person A has a National Savings Scheme (NSS) account.
• They withdraw ₹50,000 from the account.
• TDS of 10% (₹5,000) is deducted under Section 194EE.
• Person A receives ₹45,000 after tax deduction.

Case After Notification

• Person B has an NSS account.
• They withdraw ₹50,000 on or after the notification’s publication date.
• No TDS is deducted, and they receive the full ₹50,000.

Conclusion

This notification benefits individuals who withdraw money from National Savings Scheme (NSS) by ensuring they receive the full amount without TDS deduction. However, the amount withdrawn will still be subject to income tax as per the individual’s tax slab when they file their returns.

Also Read:

1. Recommendations of the 55th Meeting of the GST Council
2. Changes in GST and Income Tax during the Financial Year 2024-25
3. TDS and TCS provisions applicable from April 1, 2025
4. Rationalizing TDS: A Deep Dive into Budget 2025’s Proposals

Go To Memorandum

Go To Finance Bill 2025

Read More on Union Budget 2025

CA Cult YouTube: 
1. TCS Credit of minor in the hands of Parent | Clubbing | Union Budget 2024
2. Calculation of Income Tax FY 2024-25 | Old vs New Regime | For Salaried Employees

Also Read: New Income-tax Bill 2025 Navigator