TDS under Section 194EE and Section 194F

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 –

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 30^th 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-