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NSS(1989) tax

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Shantanu Kulkarni

1 Points Posted on 01 June 2023

everyone,

I'm new to this forum and I'm hoping you can help me with a question about my mother's NSS Postal account. She opened the account in 1989 with a deposit of ₹45,000. Over the years, the balance has grown to around ₹7 lakhs.

My question is, if she withdraws all of the money, will the post office deduct TDS? And will she have to pay income tax on the amount?

If you have any suggestions on how to avoid paying tax and TDS, I would be grateful. Also, if my mother withdraws the money and gifts it to my sister and me, will we be taxed on the amount?

Thanks in advance for your help.

Shantanu

Replies (2)

Quick Summary

This discussion addresses tax queries regarding a National Savings Scheme (NSS) account opened in 1989. The user is concerned about Tax Deducted at Source (TDS) and income tax liability upon withdrawing a substantial balance. The advice provided clarifies that TDS will be deducted if interest exceeds ₹50,000, but tax liability may be minimal or even result in a refund if the account holder has no other income. Gifts to close relatives are also clarified as tax-exempt.

CA Aakarsh Jain

10436 Points Posted on 01 June 2023

Yes, this amount is taxable, and TDS will be deducted if the interest amount is above 50,000.
You can save your tax and take a refund of TDS deducted if your mother doesn't have any other income.
If she gifts it to you, then it will not be taxable in your hands as a gift to relatives is exempt.
If you have further doubts, then I'm leaving the details in your inbox.