Section 194N – TDS on Cash Withdrawal & Deposits

The section applicable for TDS (Tax Deducted at Source) on cash withdrawal and deposit in India is Section 194N of the Income Tax Act, 1961. This section was introduced by the Finance Act 2019 and is applicable to cash withdrawals and deposits exceeding Rs. 1 crore in a financial year from a single account. This section is applicable from 1^st July 2020.

Here are the details:

1. The provisions of section 194N are applicable to individuals, Hindu Undivided Families (HUFs), firms, companies, and other entities.

• Cash withdrawals: TDS deducted at the rate of 2% on cash withdrawals exceeding Rs. 1 crore in a financial year from a single account, under section 194N of the Income Tax Act. This provision is applicable to individuals, Hindu Undivided Families (HUFs), firms, companies, and other entities.

• Cash deposits: TDS deducted at the rate of 2% on cash deposits exceeding Rs. 1 crore in a financial year in a single account, under section 194N of the Income Tax Act. This provision is applicable to scheduled banks, co-operative banks, and post offices.

• The TDS amount is then deposited with the government and a TDS certificate is issued to the taxpayer.

• The TDS is to be deducted by the bank or post office or cooperative bank making the payment.

There are certain exemptions available from the provisions of section 194N of the Income Tax Act, which deals with TDS (Tax Deducted at Source) on cash withdrawals and deposits exceeding Rs. 1 crore in a financial year. Some of these exemptions are as follows:

1. Cash withdrawals and deposits by the government, banks, cooperative societies, and business correspondents appointed by banks.
2. Cash withdrawals and deposits by certain recipients, such as agricultural produce market committees, primary agricultural credit societies, and fishermen societies.
3. Cash withdrawals and deposits by a person who is subject to regular income tax assessment.
4. Cash withdrawals and deposits by certain specified entities, such as entities engaged in the collection of electric charges or toll charges.
5. Cash withdrawals and deposits by persons who are exempt from tax under the Income Tax Act, such as charitable trusts and religious institutions.
6. Cash withdrawals and deposits by persons who are not required to obtain a PAN (Permanent Account Number) or whose PAN is not linked to the account from which the cash is withdrawn or deposited.

It’s important to note that these exemptions are subject to certain conditions and restrictions. Top of FormThe provisions of section 194N are applicable only to certain specific cases of cash withdrawals and deposits, and not on all cash transactions. It’s advisable to consult a tax expert or refer to the Income Tax Act for more details on the applicable TDS provisions.