TDS New TDS deduction No cash transactions exceeding 1 Crore -Section 194N

New TDS deduction No cash transactions exceeding 1 Crore -Section 194N

New TDS deduction No cash transactions exceeding 1 Crore -Section 194N

New TDS deduction No cash transactions exceeding 1 Crore -Section 194N

Present TDS exclusion No currency purchases above 1 Crore -Chapter 194N
To discourage cash transactions and to continue heading towards a cash-free economic structure, a new Section 194N has been enacted under the Income Tax Act with effect from 1 September 2019 to allow for a tax deduction on cash withdrawals made by any individual from his bank or post office account.

Who wants the tax to be deducted?

Section 194N necessitates any bank corporation, cooperative bank, or post office to deduct tax on cash withdrawals made by any person from the account(s) kept with that bank or post office.

When is the tax to be deducted?

The TDS tax provided under Section 194N shall be deducted only if the total amount of cash withdrawal during the previous year by a person in one or more of his bank or post office accounts, even as the case may be, exceeds Rs.1 crore. In addition, the tax is to be deducted only from the amount in excess of Rs.1 crore.

What's the TDS rate?

The tax is withheld at a rate of 2 per cent on the sum of the cash withdrawal in excess of Rs. 1 crore.

What is the date of implementation of the terms of Section 194N?

Section 194N shall extend with effect from 1 September 2019 onwards. Any bank or post office is thus needed to deduct TDS on or after 1 September 2019 upon withdrawal of cash. Nevertheless, Section 194N seems to provide that the tax is to be deducted unless the cumulative amount of cash withdrawn by a person from one or more of his bank or post office accounts during the previous year exceeds Rs.1 Crore. The cumulative amount of cash extracted during the previous year shall, therefore, be considered for the purposes of determining the threshold value of Rs.1 crore. In order to understand further, the CBDT released a Press Release, dated 30-08-2019, to ensure that any cash withdrawal prior to 1 September 2019 would not be subjected to the TDS referred to in Section 194N. Furthermore, as the requirement for Rs.1 crore is for the previous year,

The measurement of the cash withdrawal balance for the deduction alluded to in Section 194N shall be taken into account as of 1 April 2019. Thus, if an individual has already withdrawn Rs. 1 or more in cash before 31 August 2019 from one or more accounts kept with a mutual or cooperative mutual or post office, the 2% TDS extends to all additional withdrawals taken on or after 1 September 2019.

Basic Understanding on TDS payment to Resident Contractors & Professional-Section-194M, Form 26Q and Form 16D

When isn't the tax required to be deducted?

No tax shall be withheld if the following beneficiaries borrow cash from a bank or post office:

NSDL: Update on Extension of Quarterly TDS/TCS statement filing dates for four Quarters 

The aim of the tax deduction at source is to get more individuals into the net income tax. Compliances of tax deducted at sources (TDS) has been a central factor in the estimation of income tax by business organisations. Our team of professionals has many years of experience in this area, guides our customers in making their payments, and assists them in filing TDS returns on time and we are among the top of TDS Expert India

Disclaimer: The content of this post isn't considered to be professional or legal advice, We aren't responsible for any damages arising from your access to the location content & must not be relied on or used as a substitute for legal advice from a lawyer professional in your jurisdiction. CARajput is among India's big digital compliance services platform which committed to helping people have started & developed their businesses. We had started with the goal of creating it easier for start-ups to start out their business. Our main aim is to assist the businessman with applicable laws & regulations compliance and providing support at each & every level to make sure the business stays compliant and growing continuously. For any query, help or feedback you may in touch on singh@carajput.com or Call or what’s-up on 9-555-555-480

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