Cash Withdrawal of above 1 crore? Deduct TDS under section 194N from Sep 1, 2019.

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The objective of introducing Section 194N by government in the Union Budget 2019 of July 2019 is to discourage cash transactions in the country and promote the digital transaction in India or promote less cash economy. ‘Section 194N –TDS on cash withdrawals over and above Rs 1 crore’ has been introduced through the Finance Bill, 2019. 

To whom is 194N applicable?

Applicable  to withdrawals made by below:

  • An Individual
  • A Hindu Undivided Family (HUF)
  • A Company
  • A partnership firm or an LLP
  • A local authority
  • An Association of Person (AOPs) or Body of Individuals (BOIS)

Who will deduct TDS?

Applicable  The following payers will deduct TDS

  • Any bank (private or public sector)
  • A co-operative bank
  • A post office  

Who are exempted from 194N?

  • Any government body
  • Any bank including co-operative banks
  • Any business correspondent of a banking company (including co-operative banks)
  • Any white label ATM operator of any bank (including co-operative banks)
  • Any other person notified by the government  

Dates of applicability?

The threshold of Rs 1 crore is with respect to the previous year, calculation of the amount of cash withdrawal for triggering deduction under section 194N of the Finance Act shall be counted from April 1, 2019  

The Central Board of Direct Taxes (CBDT) has further clarified that if a person has already withdrawn Rs 1 crore or more in cash up to August 31, 2019, in the current fiscal, the two percent TDS shall apply on all subsequent cash withdrawals.

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