In a move that brings relief to individual investors, the Central Board of Direct Taxes (CBDT) has notified that no Tax Deducted at Source (TDS) shall be applicable on certain withdrawals from the National Savings Scheme (NSS). The exemption was notified via Notification No. 27/2025, dated April 4, 2025.
The notification, issued under sub-section (1F) of Section 197A of the Income-tax Act, 1961, specifies that no tax shall be deducted at source under Section 194EE on payments made to an individual assessee withdrawing amounts referred to in clause (a) of sub-section (2) of Section 80CCA.
This effectively means that individuals withdrawing accumulated balances from NSS accounts-such as the National Savings Scheme (NSS-87 Account)-will not face any TDS deductions from the date of publication of this notification in the Official Gazette.
Key Highlights
- Notification No. 27/2025-Income Tax, issued by CBDT on April 4, 2025.
- Exempts individual taxpayers from TDS under Section 194EE on NSS withdrawals.
- Applies to payments under clause (a) of Section 80CCA(2).
- Effective immediately upon publication in the Official Gazette.
Section 194EE of the Income-tax Act mandates TDS at 10% on premature withdrawal from NSS accounts if the amount exceeds Rs. 2,500, unless covered under exemptions. This latest notification removes the TDS burden for eligible individuals, enhancing liquidity and simplifying tax compliance for small savers.
Official copy of the notification is as follows
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