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NSS 1987: partial withdrawal is possible
I am a senior citizen and have NSS 1987 account with post office, Ongole. When I approached the post master for withdrawal, he asked me to close the accounts and take back all the amounts at credit. If I withdrew the
entire amount, I have to pay income-tax to the extent of more than Rs. 20,000 and hence I requested him to permit me to withdraw in small quantities every year, but I was told that the account must be closed as per the Circular from the higher authorities of postal department. What is your advice on this and kindly guide me.
The post master is not correct in refusing partial withdrawal from the reader’s account under National Savings Scheme, 1987. It is certainly open to the account holder to stagger the withdrawal of, so as to reduce his tax liability. A complaint to Post Master General should evoke a correct response. Please see my answer in The Hindu dated February 19, 2007 on the complaint that withdrawal over Rs. 50,000 was declined on the misunderstanding of a Circular from the Head Office. Tax Forum is advised that the partial withdrawal over this amount was permitted after the clarification.
National Savings Scheme, 1987, which continues without any amendment till date reads as under:
“(4) Withdrawal will be permitted only once in a year, provided that the amount of such withdrawal shall not exceed the balance at the end of the fourth preceding financial year, less withdrawals, if any, already made”.
S. RAJARATNAM
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