(1) Every banking company
(2) cooperative bank; or
(3) post office,
who is responsible for paying any amount in cash the aggregate of which is exceeding Rs. 1 crore during the previous year from one or more accounts maintained by the recipient with it shall at the time of payment of such sum deduct an amount equal to 2% of sum as TDS.
Proviso;
Provided that 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 for filing return of income under subsection 1 of Section 139 has expired, immediately preceding the previous year in which payment of such amount is made to him, The provision of this section shall apply with the modification that:
1. TDS shall be deducted at 2% of the amount exceeding Rs. 20 lacs during the previous year; and
2. (a) an amount equal to 2% of the TDS where the amount or aggregate of amounts, being paid in cash exceeds Rs. 20 Lacs during the previous year but does not exceed Rs. 1 crore; or
(b) an amount equal to 5% of the sum where the aggregate payment in cash exceeds Rs. 1 crore during the previous year.
Date of applicability:
Old section 194 was applicable up to 30 June 2020 provided that 2% TDS will be deducted on cash withdrawal above 1 crore. The new section 194N into force from 1.07.2020 .
This Section applies to cash withdrawal made by resident as well as non resident.
Analysis ;
1. The provisions of this section apply if aggregate cash withdrawal from one or more account maintained with the bank or co-operative Bank or post office exceeds Rs. 1 crore in a previous year.
2. The limit of 1 crore is for all the branches of a paying cooperative bank or post office or Banking co.
3. Cash withdrawal from two different Banks shall not be aggregated.
Persons exempted from this section..
1. Section 194 shall not be applicable in case of cash payment made to
(a) Government;
(b) any banking company or operative Bank or post office
(c) any business correspondent of any banking company or cooperative Bank.
(d) any white label automatic tailor machine operator of a banking company or corporate event.
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