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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 Nevertheless, Section 194N seems to provide that the tax is to be deducted unless the cumulative amount of cash withdrawn by a person from one or more of his bank or post office accounts during the previous year exceeds Rs.1 Crore.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 Thus, if an individual has already withdrawn Rs. 1 or more in cash before 31 August 2019 from one or more accounts kept with a mutual or cooperative mutual or post office, the 2% TDS extends to all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.
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:
- Post Office
- Banking Correspondents
- White Label ATM Operators
- Central or State Government
- Banks
- Co-op. Banks
- Other persons were notified by the Government. In consultation with the RBI
- Due Date for filing GST return and Income Tax Return
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
