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Section 194N – TDS on Cash Withdrawals

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:

Deduction By Whom?

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

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:

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.

 

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-

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˜

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