Income Tax will be Charged on Cash Withdrawal

The Income Tax department has rolled out a new tool to calculate Tax Deducted at Source (TDS) rate under Section 194N on its e-filing portal.  This development comes after new rules under Section 194N relating to TDS on cash withdrawals
were implemented from July 1. 

Section 194N :-

To encourage a cashless economy, a new Section 194N was introduced in the Income Tax Act effective from July 1. 

Section 194N is applicable in case of cash withdrawals of more than Rs 1 crore during a financial year. A TDS rate of 2% will apply to the aggregate of sums of more than Rs 1 crore withdrawn from a bank or financial institution by any person from an account maintained by the recipient in a financial year.

Furthermore, this rule has been revised to link TDS with the filing of Income Tax Return (ITR).

If you have not filed your ITR for the last 3 years, your bank will charge you TDS of 2% on cash withdrawal ranging between Rs 20 lakhs to Rs 1 crore. If the amount is above Rs 1 crore a TDS rate of 5% is charged.

The good news is for those individuals who have been filing ITR for the past 3 years!

Banks To Report TDS For Cash Withdrawals Exceeding Rs 1 Crore!

The TDS form has been made more comprehensive. It is now compulsory for the deductors to state reasons for non-deduction of tax. All banks and financial institutions have to report TDS for cash withdrawals above Rs 1 crore. 

The Central Board of Direct Taxes (CBDT) has revised the Income Tax Rules to include TDS on e-commerce operators, dividend distributed by mutual funds and business trusts, cash withdrawals, professional fees and interest.

10 Comments

  1. Cbdt is not going to relax people.

    ReplyDelete
  2. Very good step by the I-Tax Dept
    The less cash transaction,less is the scope for scale scale bribery. Creation of Black Money will be minimized to a great extent. Aam aadmi need not worry
    as petty cash shelling out (to cops, clerks etc for bribing)
    ) is manageable

    ReplyDelete
    Replies
    1. What about wages of labours ..? We had to create 3hundred accounts and the time wastage of labours they had to take one day leave once a week ...

      Delete
  3. Income tax, and consequently TDS should be on income. Not on withdrawal from one's own account! Crazy laws!

    ReplyDelete
    Replies
    1. If you have not filed your ITR for the last 3 years, your bank will charge you TDS of 2% on cash withdrawal ranging between Rs 20 lakhs to Rs 1 crore. If the amount is above Rs 1 crore a TDS rate of 5% is charged.

      The good news is for those individuals who have been filing ITR for the past 3 years! This is what the rule says.

      Delete
  4. MSME having large workforce need to draw cash for lot of expenses. Taxing on withdrawl of own funds is crazy. Is this ease of doing business? Taxing on withdraws and and selecting for scrutiny if you claim refund is ridiculous. Most of the business dont have more than 3 to 4% margin on sales. Bad policies of govt surely.

    ReplyDelete
  5. From corruption and cashless tranctions point of view it is a welcome measure.
    However benami real owner accounts and investments on real estates by huge money depositor as backdoor policy also should be eyed upon to block the holes.

    ReplyDelete
  6. I have not 1 CAROR , BUT it is AGAINST OF LOK-TANTRA DESH LIKE "BHARAT-DESH".
    I Can't SAPORT it .

    ReplyDelete
  7. Very nice step it will ack the necessity of filing return of income.

    ReplyDelete

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