Section 194N is applicable in case of cash withdrawals of more than Rs 1 crore during a financial year. This section will apply to all the sum of money or an aggregate of sums withdrawn from a particular payer in a financial year.
Q1. Why TDS on Cash Withdrawal?
Q2. To Whom this section is applicable?
- An Individual
- A Hindu Undivided Family (HUF)
- A Company
- A partnership firm or an LLP
- A local authority
- An Association of Person (AOPs) or Body of Individuals (BOIs)
Q3. Who shall deduct TDS?
- Any bank (private or public sector)
- A co-operative bank
- A post office
There are certain categories of person (payee) to whom the provision of this section will not apply. They are listed below:
- Any government body
- bank including co-operative banks
- business correspondent of a banking company (including co-operative banks)
- white label ATM operator of any bank (including co-operative banks)
Q4. What is the Ceiling Limit for Tax Deduction?
Q6. From when Section 194N is applicable?
Q7. Will the amount withdrawn before 1st September be considered in Section 194N?
Q8. If before 1st September Cash withdrawn exceeds Rs. 1 Crore, will TDS be applicable on that amount also?
|Case||1st April 19 – 31st Aug 19(A)||1st Sept 19 – 31st March 20(B)||Total Withdrawals||Tax for Period A||Tax for Period B||Total Tax|
|1||90,00,000||10,15,000||1,00,15,000||–||2% of 15000||300|
|2||1,10,00,000||20,000||1,10,20,000||–||2% of 20000||400|
Q9. Why people are protesting against this new section?
Ans: As this will stop rotation of bank balance in form of cash which is the main requirement in many businesses. In some businesses net profit does not reach to 2%. In this time of inflation, amount in the form of TDS will be blocked for a period of time. That’s the reason people are protesting against it.