Section 194N is pertaining to Tax Deducted At Source for withdrawal Cash by any person from,
who is responsible for any sum, being the amount or the aggregate of amounts, as the case may be, in cash exceeding one crore rupees during the previous year, to any person (recipient) from one or more accounts maintain by the recipient with it shall , at the time of payment of such sum, deduct an amount equal to two percent of such sum, as income tax.
Please remember that, this section is applicable to all tax payers, which includes
But does not includes:
Amendment from 1st July, 2020
In case of recipient who has not filed the returns of income for all of the three assessment years relevant to the three previous years, for which the time limit of filing returns of income section 139(1) has expired, immediately preceding the previous year in which the payment of the sum is made to him, the provision of this section shall apply.
(a) the sum shall be the amount or the aggregate of amounts, as the case may be, in cash exceeding rupees twenty lakhs during the previous year; and
(b) the deduction shall be
Up to 30th June, 2020 cash payment by banks exceeds rupees one crore amount of TDS two percent. There was no upper limit.
From 1st July, 2020 cash payment by banks exceeds rupees twenty lakhs and the recipient has not submitted his return of income for all of the three assessment years within time limit of section 139(1), bank will deduct tax at source by two percent. Please remember that if the recipient, has submitted his return of income of previous year after due date but filed under section 139(4) is not to be considered.
If the amount of cash payment by bank exceeds rupees one crore, Five percent tax will be deducted by the bank.
XYZ LTD has withdrawn cash from their bank accounts for the payment to wages, salaries, other expenses on various dates as under:
|18.04.2019||Rs. 20,00,000||02.07.2019||Rs. 20,00,000|
|02.10.2019||Rs. 30,00,000||02.01.2020||Rs. 25,00,000|
|01.02.2020||Rs. 15,00,000||25.03.2020||Rs. 20,00,000|
In the above case bank will deduct TDS on 01.02.2020 at the rate of 2% on Rs. 10,00,000. On 01.02.2020 total payment by bank in cash exceeds Rs. 1,00,00,000 ( 20,00,000 + 20,00,000 + 30,00,000 + 25,00,000 + 15,00,000 ) Rs.1,10,00,000. TDS Rs. 20,000 and make payment of Rs. 14,80,000
Again bank will deduct TDS on 25.03.2020 at the rate of 2% on Rs.20,00,000 i.e. Rs.40,000 and bank will make payment of Rs. 19,60,000.
Mr. A who has not furnished his return of income of three previous year. He withdraw cash from bank on following dates, when bank will deduct tax and on what amount?
In the above case bank will deduct tax on 02.08.2020 at the rate of 2% on Rs.35,00,000, and make payment of Rs. 19,30,000. On 02.09.2020 at the rate of 2% on Rs.50,00,000, and make payment of Rs. 49,00,000. On 03.10.2020 at the rate of 2% on Rs. 15,00,000 and at the rate of 5% on Rs. 25,00,000 as it exceed rupees one crore (30,000 + 1,25,000) Rs.1,55,00 .
|Dates||Amount of Withdrawal||Tax Deducted at Source||Payment received|
|03.08.2020||Rs.20,00,000||Rs. 70,000||Rs. 19,30,000|
The above change is effective from 1st July, 2020.