CBDT clarifies on applicability of Tax Deduction at Source on cash withdrawals

Sep 09, 2019 | by Avantis RegTech Legal Research Team

The Central Board of Direct Taxes on August 30, 2019, has clarified on applicability of Tax Deduction at Source (TDS) on cash withdrawals.

However, a new section 194N has been inserted in the Income-tax Act, 1961, to provide for levy of TDS @2% on cash payments in excess of one crore rupees in aggregate made during the year, by a banking company or cooperative bank or post office, to any person from one or more accounts maintained with it by the recipient and this section will come into effect from September 01, 2019.

But certain queries were received from the general public on the applicability of this section on withdrawal of cash from April 01, 2019 to August 31, 2019. Therefore, CBDT clarifies that section 194N inserted in the Act, will come into effect from September 01, 2019. Hence, any cash withdrawal prior to September 01, 2019 will not be subjected to the TDS under section 194N of the Act.

Therefore, if a person has already withdrawn Rs. 1 crore or more in cash upto August 31, 2019 from one or more accounts maintained with a banking company or a cooperative bank or a post office, the two per cent TDS shall apply on all subsequent cash withdrawals.


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