Section 194N: TDS on Cash withdrawal in excess on INR 1 Crore

Section 194N: TDS on Cash withdrawal in excess on INR 1 Crore

This section applies to any Banking Company, Co-operative Society or Post office who is responsible to pay any sum being amount or aggregate of amounts, in cash, in excess of INR 1 Crore during the Previous Year to any person from one or more accounts maintained by the recipient.

TDS at a rate of 2% of amount drawn exceeding the limit shall be deducted.

Applicability of Modification of Section 194N:

In case of any recipient who has not filed the return of income for all of the immediately preceding 3 Assessment years relevant to the Previous Year, for which the time limit for filing the return of income as per section 139 has expired.

“the sum shall be the amount or the aggregate of amounts, as the case may be, in cash exceeding INR 20 lakh rupees during the previous year” the deduction shall be—

1. TDS amount equal to two percent shall apply on the sum of amount or the aggregate of amounts of cash withdrawn from one or more accounts maintained by the recipient of amount above INR 20 Lakh and upto INR 1 Crore.

2. TDS amount equal to five percent shall apply on the sum of amount or the aggregate of amounts of cash withdrawn from one or more accounts maintained by the recipient above INR 1 Crore.

Shortcut of TDS rates are as under:

This section shall not apply to any payment made to :

1. The Government and it’s departments;

2. Banking Company or Co-operative society or Post office engaged in Banking business;

3. Business Correspondent any business correspondent of a banking company or co-operative society engaged in carrying on the business of banking in accordance with the guidelines of RBI

4. Any white label Automated Teller Machine operator of a banking company or co-operative society engaged in carrying on the business of banking in accordance with the authorization issued by RBI.

Note: The Calcutta High Court, on 8^th July 2021, passed an interim order restraining the Income tax department from collecting TDS on cash withdrawals under section 194N till 30^th September 2021.