Section 194N – TDS on Cash Withdrawals

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In an endeavor to reduce cash payments/withdrawals the Budget of 2019 introduced Section 194N; which states that TDS shall be deducted by the payer in case of cash withdrawal above a given threshold.

Applicability:

  • Applies in case of cash withdrawals of more than Rs 1 crore during a financial year.
  • Applies to sum of money or an aggregate of sums withdrawn from a particular payer in a financial year.
  • The deduction shall be made only on the excess amount (i.e. Above Rs.1 Cr withdrawal).
  • Exception: The threshold for an Individual who has not filled has not filed income tax return for three years immediately preceding years shall be Rs.20L instead of Rs. 1Cr.

Deduction By Whom?

The payer making the cash payment will have to deduct TDS under Section 194N:

  • Any bank (private or public sector)
  • A co-operative bank
  • A post office

The threshold shall apply individually for each payer i.e. a person having 3 bank accounts can withdraw up to Rs 1Cr each from each bank account without Section 194N being applicable.

Rate of Deduction:

  • The payer will have to deduct TDS at the rate of 2% on the cash payments/withdrawals of more than Rs 1 crore in a financial year under Section 194N.

Thus, if aggregate withdrawal in one FY is Rs. 1.15Cr, TDS would be on Rs 1,50,000 at 2% i.e. Rs 3,000.

 

  • Exception: If an Individual receiving money has not filled the income tax return for three years immediately preceding the previous year- Then TDS rate is 2% on the cash payments/withdrawals of more than Rs 20 lakh and up to Rs 1 crore, and 5% for withdrawal exceeding Rs 1 crore.

Thus, if aggregate withdrawal in one FY is Rs. 1.15Cr, TDS would be Rs. 2.35L (2%*Rs.80L + 5%*Rs.15L)

Exceptions:

This section is not applicable in case the payee is-

  • Any government body
  • Any bank including co-operative banks
  • Any business correspondent of a banking company (including co-operative banks)
  • Any white label ATM operator of any bank (including co-operative banks)
  • Any other person notified by the government

How the Deductor can verify the applicability of TDS u/s 194N?

A functionality is added to the e-filing portal of the Income Tax Department for Verification of Applicability u/s 194N. The payer/deductor needs to fill the PAN and mobile number and it will show the applicability.

˜Authored by – CA Anushka Saraogi˜

New FVUs Version 7.3 & 2.169 released by NSDL on 12th Oct 2021

File Validation Utility (FVU) Version 7.3 – Summary

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The Income Tax Department released FVU Version 7.2 on 1st October 2021. Owing to some technical issue, it released the revised FVU Version 7.3 effective from 13th October 2021 without any fundamental change.

Over the last few months, there has been quite a few changes in the TDS / TCS that was announced. These changes have been incorporated in this FVU release for smooth filing of TDS / TCS Returns.

Summary of changes with appropriate explanation is as under:

Additions of new Sections

  • Section 194P – Form 24Q (Salary TDS Returns)

Deduction of Tax in case of specified Senior Citizens. Value ‘C’ in Remarks column will be applicable for this section in case of non-availability of PAN. This comes into force from FY:2021-22 onwards.

  • Section 194Q – Form 26Q

TDS on payment of certain sums for Purchase of Goods. Values ‘S’ & ‘C’ will be applicable for this section. This comes into force from FY:2021-22 onwards.

  • Section 196D(1A) – Form 27Q

Income of Specified Fund from Securities referred to in Clause (a) of sub-section (1) of Section 115AD (other than interest income referred to in Section 194LD). This section will be applicable from FY:2020-21, Quarter 3 onwards where the date of payment is on or after 01/11/2020.

Form 26Q – Additions on New Values in ‘Remarks’ column

 

Remark ‘P’ Applicable only for Section 194 (TDS on Dividend)

 

This is for ‘No Deduction’:

–          on account of payment of Dividend made to business trust referred to Clause (d) of the second provisio to Section 194, or

–          in view of any notification issued under Clause (e) of the second provisio to Section 194

 
Remark ‘Q’ Applicable only for Section 194A (TDS on Interest)

 

This is for ‘No Deduction’ in view of payment made to an entity referred to in Clause (x) of sub-section (3) of Section 194A.

 
Remark ‘U’ Applicable to all Sections except 192A, 194B, 194BB, 194LBC, 194N & 194NF

 

This for Deduction at a higher rate for non-filing of Income Tax Return in view of Section 206AB.

 

 

Form 27Q – Additions on New Values in ‘Remarks’ column

 

Remark ‘I’ Applicable only for Sections 196D & 196D(1A)

 

This is for ‘No Deduction’ in view sub-section of Section 196D in respect of income of the nature of Capital Gains on transfer of securities referred to in Section 115AD paid of payable to a Foreign Institutional Investor.

 

Section 196D – applicable from FY:2021-22 onwards

Section 196D(1A) – applicable from FY:2020-21 (Quarter3) onwards

 
Remark ‘H’ Applicable only for Section 196(1A)

 

This is for ‘No Deduction’ in view of provisio to sub-section (1A) of Section 196D in respect of an income paid to a specified fund which is exempt under Clause (4D) of Section 10.

 

This is applicable from FY:2020-21 (Quarter3) onwards.

 
Remark ‘J’ Applicable to all Sections except 192A, 194LBC, 194N & 194NF

 

This for Deduction at a higher rate for non-filing of Income Tax Return in view of Section 206AB by the non-resident having permanent establishment in India.

 

 

Form 27EQ – Additions on New Values in ‘Remarks’ column

 

Remark ‘I’ Applicable to all wherever TCS Sections

 

This applies for Collection at a high rate in view of Section 206CCA.

 

This would come into force from FY2021-22 (Quarter 2)

 

 

Validation Change – Section 194K of Form 26Q

Existing Remark ‘B’ (in case of ‘No Deduction’ on account of declaration under section 197A) will also be applicable to Section 194K from FY:2021-22 onwards. This is in addition to the other sections where it is already applicable.

Validation Change – Section 196D of Form 27Q

  • In case PAN of Deductee is not available, following values of the ‘Deductee’ can be provided:
  • Email ID
  • Contact No.
  • Address in Country of Residence
  • Tax Identification No. / Unique Identification No.
  • New added Remark ‘I’ will be applicable. This remark will also apply in ‘Nil’ Challan Return.
  • Existing Remarks ‘C’ (for ‘Higher Deduction’) and ‘G’ (for ‘No Deduction’) will also be applicable for Section 196D.
  • Changes are applicable from FY:2021-22 onwards.

New FVUs Version 7.3 & 2.169 released by NSDL on 12th Oct 2021

New FVUs Version 7.3 & 2.169 released by NSDL on 12th Oct 2021

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Due to some technical issues in the earlier file validation utility release (7.2 & 2.168), Department has released the updated versions of FVUs on 12/10/2021.

Applicability: From October 13th, 2021 onwards

Revised File Validation Utility versions are as below:

· FVU Version 7.3 :– Applicable for quarterly e-TDS/TCS statement pertaining to FY 2010-11 onwards.

· FVU Version 2.169 :– Applicable for quarterly e-TDS/TCS statements from FY 2007-08 up to FY 2009-10.

Further, there won’t be any change in existing file formats. Features will remain same as per the previous FVUs version (7.2. & 2.168).

TDSMAN has been fully updated with newly released File Validation Utilities

To update TDSMAN – Click on: Utilities > Update Software

To view the original documents click here

Download FVU version 7.3

Download FVU version 2.169

New FVUs Version 7.2 & 2.168 released by NSDL – Key Features

Section 193- TDS on Interest on Securities

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TDS shall be deducted on interest paid on securities by the interest payer.

  1. Time of Deduction- TDS to be deducted at the time of credit or payment, whichever is earlier.
  2. Deductee- The interest receiver needs to be a Resident
  3. TDS Rate- TDS at a flat rate of 10% shall be applicable.

If PAN is not furnished, then tax to be deducted at a higher rate

  1. Meaning of Interest on Securities-

a. Interest on any security of Central Government or State Government

b. Interest on debentures or

c. Interest on other securities for money issued by or on behalf of a local authority or a company or a corporation established by a Central, State or Provincial Act.

5. Cases when TDS shall not be deducted-

a. Interest payable to Insurance companies

b. Interest paid by widely held company (where interest amount is not more than Rs. 5,000) subject to certain conditions

c. Any interest payable on a dematerialized security recognized by a stock exchange.

d. Any interest payable on Central Govt securities or State Govt securities.

e. Interest paid or credited on 8% saving (Taxable) Bonds 2003 issued by the Central Government (where interest amount is not more than Rs. 10,000).

f. Where a self-declaration under Form No. 15G/15H is furnished by a particular person.

g. Any payment made to New Pension System Trust

h. No deduction of tax from specified payment to notified institutions, association, or body, etc.

i. No TDS shall be deducted at source from the payments of the nature specified under section 10(23DA) received by any securitization trust.

j. Certain entities whose income is unconditionally exempt under section 10

˜Authored by – CA Anushka Saraogi˜

New FVUs Version 7.2 & 2.168 released by NSDL – Key Features