Section 194N:TDS @ 2% on Cash Withdrawal from Banks

Section 194N:TDS @ 2% on Cash Withdrawal from Banks

Section 194N:TDS @ 2% on Cash Withdrawal from Banks

Who is liable to Deduct:

Every person, being,

  •  a banking company

  •  a co-operative society engaged in carrying on the business of banking; or

  • a post office,

who is responsible for paying any sum, being the amount or the aggregate of amounts, as the case may be, in cash exceeding Rs. 1 Crore during the previous year, to any person 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 such sum, as income-tax.

Important

Provided that in case of a 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 of file return of income section 139 has expired, immediately preceding the previous year in which the payment of the sum is made to him, the provision of this section shall apply with the modification that

(i) the sum shall be the amount or the aggregate of amounts, as the case may be, in cash exceeding Rs.20 Lakhs during the previous year; and

(ii) the deduction shall be

  • (a) an amount equal to 2% of the sum where the amount or aggregate of amounts, as the case may be, being paid in cash exceeds Rs.20 Lakhs during the previous year but does not exceed Rs.1 Crore. or

  • (b) an amount equal to 5% of the sum where the amount or aggregate of amounts, as the case may be, being paid in cash exceeds Rs.1 Crore during the previous year.

For Eg. If any person has not filed income tax returns for last 3 years preceding the year in which he is withdrawing cash, then

  • (i)If he is withdrawing more than Rs.20 Lakhs but less than Rs.1 Crore, then 2% TDS will be deducted.

  • (ii)If he is withdrawing more than Rs.1 Crore, then 5% TDS will be deducted.

This section will not apply if any payment made to:

  • Government

  • Any banking company or co-operative society engaged in carrying on the business of banking or a post office

  • Any business correspondent of a banking company or co-operative society

  • White label automated teller machine(ATM) operator of a banking company or co-operative society

Use Income Tax Calculator for FY 2020-21,Click here to download.

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