Section 194EE and Section 194F – TDS from payment in respect of deposit under NSS and TDS from payment on account of Repurchase of units by Mutual Funds or UTI

Continuing the TDS article services, the present article tries to cover the two rarely touched topics TDS in respect of deposit under NSS (Section 194EE) and TDS on account of repurchase of units by Mutual Funds or UTI (Section 194F).

Understanding the basics of both Section 194EE and Section 194F –

Section 194EE –

This section states that the person making payment of amount referred to in section 80CCA(2)(a) is required to deduct TDS. Section 80CCA (2) (a) refers to the withdrawal of amount deposited under the National Saving Scheme etc

Section 194F –

This section contains provisions relating to the repurchase of units of Mutual Fund / Unit Trust of India. As per section 194F, the person making payment of any amount referred to in section 80CCB (2) is required to deduct TDS.

Section 80CCB (2) of the Income Tax Act refers to the amount which is invested by the assessee in the units being issued under a plan formulated under the Equity Linked Savings Scheme. The amount so invested has been allowed as a deduction, however, the amount invested (whole or part) is returned back to the assessee by the Fund / Trust either by way of repurchase of the units or on the termination of the plan.

Time of deduction of TDS –

The Deductor liable to deduct TDS as per provisions of section 194EE and section 194F is required to deduct TDS at the time of making payment of the requisite amount.

Rate of TDS –

The rate at which TDS is to be deducted under both the section 194EE and 194F are –

Section Rate of TDS
Section 194EE 10%
Section 194F 20%

Exemption limit –

1. Section 194EE– As per the said section, no TDS is to be deducted if the aggregate amount paid to the payee, during the financial year, is less than INR 2500.

2. Section 194F– There is no exemption limit provided under section 194F.

Time of deposit of TDS with the Government –

TDS deducted under Section 194EE and / or Section 194F is required to be deposited within a period of 7 days from the end of the month in which TDS is deducted. However, the TDS deducted in the month of March is to be deposited on or before 30th April.

Further, in the case of Government Deductor, TDS deducted is to be deposited on the same day in case of payment without production of a challan.

Also Read-

Particulars
TCS – Tax Collection at Source – A Complete Guide
TDS Rate Chart for Financial Year 2019-2020
Section 192 – TDS on Salary
Section 192A – TDS on Premature withdrawal from EPF
Section 193: TDS on Interest on Securities
Section 194 – TDS on dividend
Section 194A: TDS on interest other than interest on securities
Section 194B and Section 194BB – TDS
Section 194C – TDS on Contractors
Section 194D – TDS on insurance commission
Section 194DA – TDS in respect of Life Insurance Policy
Section 194E – TDS on payment to Non-resident Sportsmen or Sports Association
Section 194G TDS on Commission on Sale of Lottery Tickets
Section 194H – TDS on Commission or Brokerage
Section 194I of Income Tax Act, 1961 – TDS on Rent
Section 194IA TDS on transfer of immovable property
Section 194IB – TDS on Rent paid by Individual / HUF
Section 194LA: Payment of Compensation on acquisition of certain immovable property
TDS under Section 194LB, 194LBA, 194LBB and 194LBC
Section 194LC: TDS on income by way of interest from an Indian Company or a business trust
Section 194LD TDS on income by way of interest on certain bonds and Government Securities
Section 194J TDS on Fees for Professional or Technical Services
Section 194N – TDS on Cash Withdrawals
Section 194M: TDS on Payment of certain sum by certain Individual / HUF
Section 195 TDS on payment of any other sum to a non-resident
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