As it is evident that Government of India is continuously striving to discourage cash transactions and moving towards less cash economy, in this move a new section of TDS (Tax deducted at Source) 194N was introduced in income tax act through Finance act 2019. The provisions of new section were applicable from 1st September 2019. Section has gone various changes since introduction and various relaxation been provided from time to time. Section is recently been amended by Finance Act ,2020. Article analyses Provisions of Section 194N as below-
Section 194N; To deduct TDS @2% and deposit in Government Exchequer as prescribed with in the specified time from the cash withdraw by any person from any of the accounts maintained with:
If any Person withdraws Cash in excess of Rs. 1 crore then the Banks/Co-operative Society/Post office shall deduct TDS @2% on the amount exceeding 1 crore.
There is some exception to the Provisions of this Section are not applicable to the below withdrawers or recipient or applicable at reduced rates-
Now, in Finance Bill 2020, the amendment has been proposed and the bill got the President of India consent on 27th March 2020, the proposed amendments have been enacted:
In addition to old/earlier provision the below amendments have been made.
If any Person who has not filled his/her Return of Income for all the last three years and the time limit under section 139(1) to file the return has expired, then for those Recipients/Withdrawers the rate of TDS would as below:
Rate of TDS shall be applicable in below both the cases on the amount exceeding twenty lakh rupees:
The Liability to deduct TDS is on your Banks, Co-operative Society, Post Offices etc. (deductors) where the assessee has the accounts.
Deductee The Section is applicable to all types of withdrawers whether Individual, HUF, Firm, LLP, Company etc. except the exception given above.
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