The small savings rate cut has been reversed, but investors in these schemes have other problems looming in the horizon. The government has introduced new rules for tax deduction at source (TDS) on small savings schemes. If an investor withdraws more than Rs 20 lakh from post office schemes, including the PPF, TDS will be withheld from the withdrawal balance if income tax returns have not been filed for the previous three assessment years. The TDS will be 2% of the amount exceeding Rs 20 lakh withdrawn from the Post Office schemes during a financial year. If the amount exceeds Rs 1 crore, TDS will be 5% on the amount in excess of Rs 1 crore. This provision under Section 194N of the Income Tax Act 1961 came into effect from 1 July 2020. Even tax filers have not been spared the TDS. If cash withdrawals exceed Rs 1 crore by an ITR filer in a financial year, the TDS will be 2% of the amount above `1 crore.
 

Source Read more at:
https://economictimes.indiatimes.com/wealth/tax/2-5-tds-on-small-savings-if-itr-not-filed/articleshow/81884632.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst