2% TDS on cash withdrawals from banks/post offices with effect from 01.09.2019-New Section 194N
In order to further discourage cash transactions and move towards less cash economy, the Union Budget 2019-20 has proposed to insert a new section 194N.
The new section provide for levy of TDS at the rate of 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 an account maintained by the recipient.
It has been proposed to exempt payment made to certain recipients, such as the Government, banking company, cooperative society engaged in carrying on the business of banking, post office, banking correspondents and white label ATM operators, who are involved in the handling of substantial amounts of cash as a part of their business operation, from the application of this provision.
It is proposed to empower the Central Government to exempt other recipients, through a notification in the official Gazette in consultation with the Reserve Bank of India.
This amendment will take effect from 1st September, 2019.
There seems to be some confusion in the minds of public at large as to whether the threshold of Rs. 1 crores is with respect to cash withdrawal per bank account or is it applicable to aggregate withdrawals per bank?
Please note the liability has been fastened on the banking company/co-operative society/post office and not to a branch of it. Secondly the section section clearly talks of “aggregate of sums” paid which leaves no doubt that the said threshold is with respect to per bank/post office and not individual account.
Example-1
A person has one account each with three different banks. He can withdraw Rs. 1 crores x 3 banks = 3 crores without TDS
Example-2
A person has three account in three different/same branches of one bank. He can withdraw Rs. 1 crores only without TDS
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Two different current accounts with different Company Names, but have same proprietor in same branch - can both accounts be used for One Crore each withdrawal separately Also will one crore be counted as from 1 September 2019 to 31 March 2020. Or 1 April 2019 to 31 March 2020. Please Reply.
deduction is PAN wise. period starts from 1st Sep.