{"id":11738,"date":"2020-06-29T17:28:28","date_gmt":"2020-06-29T11:58:28","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=11738"},"modified":"2021-01-19T12:39:11","modified_gmt":"2021-01-19T07:09:11","slug":"tds-under-section-194n-of-income-tax-act-cash-withdrawal","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/tds-under-section-194n-of-income-tax-act-cash-withdrawal\/","title":{"rendered":"Latest guide on TDS under Section 194N of Income Tax Act: Cash Withdrawal"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The\nFinance Minister in the \u2018Union Budget 2019\u2019 has presented Section 194N for \u2018deduction\nof tax at source (TDS)\u2019 on cash withdrawals exceeding Rs. 1 crore, which will\nbe valid from July 1, 2020. By way of this, the Finance Act, 2020, has tightened\nup the existing provisions for those who have not completed income tax returns.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/tds-under-section-194n-of-income-tax-act-cash-withdrawal\/#Overview_of_TDS_under_Section_194N\" >Overview of TDS under Section 194N<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/tds-under-section-194n-of-income-tax-act-cash-withdrawal\/#Applicability_of_TDS_under_Section_194N\" >Applicability of TDS under Section 194N<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/tds-under-section-194n-of-income-tax-act-cash-withdrawal\/#CBDT_Notification_on_cash_withdrawal\" >CBDT Notification on cash withdrawal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/tds-under-section-194n-of-income-tax-act-cash-withdrawal\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Overview_of_TDS_under_Section_194N\"><\/span>Overview of TDS under Section 194N<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nGovernment has presented TDS under Section 194N (Section applies to an\naccumulation of sums withdrawn from a particular payer in a financial year) <strong>intending to promote the digital economy\nand to discourage cash transaction<\/strong>s in the country in the \u2018Union Budget\n2019\u2019.<\/p>\n\n\n\n<p>On the\nother hand, the Scope of TDS on cash withdrawal has been extended under the\namended Section 194N of the Income Tax Act, which has been amended by vide\ncircular under \u2018clause 84 of the Finance Act 2020\u2019.<\/p>\n\n\n\n<p>If the with drawer has not finished <a href=\"https:\/\/corpbiz.io\/income-tax-return-filing\"><strong>filling tax return<\/strong><\/a> for three years, <strong>TDS at the rate of 2%<\/strong> is obligatory to be deduced. It will also be applied to the withdrawal during the year go beyond Rs 20 lakhs, but a lesser amount than Rs 1 Cr. <a href=\"https:\/\/corpbiz.io\/tds-return-filing\"><strong>TDS<\/strong><\/a> at the rate of 5% is required to be deducted for withdrawal more than Rs 1 crore.\u00a0<\/p>\n\n\n\n<div class=\"shadow1\"><strong>Note:<\/strong> The Amendment of \u2018TDS under Section 194N\u2019 will be valid from July 1, 2020.&nbsp;<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Applicability_of_TDS_under_Section_194N\"><\/span>Applicability of TDS under Section 194N<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>The section applicable to withdrawals made by taxpayers who are as follows:-&nbsp;<\/em><\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"705\" height=\"558\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-183.png\" alt=\"Applicability of TDS under Section 194N\" class=\"wp-image-11739\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-183.png 705w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-183-300x237.png 300w\" sizes=\"(max-width: 705px) 100vw, 705px\" \/><\/figure><\/div>\n\n\n\n<p>On the other hand, TDS under section 194N will not apply to banks, comprising of co-operative banks government bodies, white-label ATM operator of any bank, business correspondents of a banking company, trader, farmers &#8211; whom the Central Government identifies the commission agent.&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/form-15g-15h-tds\/\">\nHow Form 15G and 15H Helps To Save TDS on Interest Income\n<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"CBDT_Notification_on_cash_withdrawal\"><\/span>CBDT Notification on cash withdrawal<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>CBDT has exempted cash withdrawal only for the \u2018authorized dealers.&#8217; The exempted parties from \u2018TDS under Section 194N\u2019 can also be comprised of its franchise agent and sub-agent, <strong>FFMC (Full-Fledged Money Changer<\/strong><sup><a href=\"https:\/\/www.rbi.org.in\/Scripts\/FFMCList.aspx\"><strong>[1]<\/strong><\/a><\/sup><strong>) <\/strong>permitted by the Reserve Bank of India legitimate mediators\/agents.<\/p>\n\n\n\n<p><strong>CBDT exemptions for the following recipients:-<\/strong><\/p>\n\n\n\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td width=\"291\">\n<p style=\"text-align: left;\"><strong><em>Specified Person<\/em><\/strong><\/p>\n<\/td>\n<td width=\"381\">\n<p><strong><em>Conditions for non-applicability of TDS under Section 194N<\/em><\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"291\">\n<ul>\n<li>Cash Replenishment Agencies (CRA\u2019s)<\/li>\n<li>Franchise agents of WLATMO\u2019s (White Label Automated Teller Machine Operators)<\/li>\n<\/ul>\n<\/td>\n<td width=\"381\">\n<p>&nbsp;<\/p>\n<ul>\n<li>Maintain a separate bank account for cash withdrawal (purpose of replacing cash in ATM operated)<\/li>\n<li>WLATMO must certify monthly to the bank regarding cash withdrawal.<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"291\">\n<ul>\n<li>The agent\/trader, operating on commission and registered any law relating to APM (Agriculture Produce Market Committee-State wise)<\/li>\n<\/ul>\n<\/td>\n<td width=\"381\">\n<ul>\n<li>If qualified to the banking company\/co-operative society\/post office that cash withdrawal<\/li>\n<li>For the persistence of making payments to the farmers on account of purchase of agriculture goods (in excess of Rs. 1 crore in last year).<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"291\">\n<ul>\n<li>An authorized foreign exchange dealer<\/li>\n<li>Franchise agent\/sub-agent<\/li>\n<li>FFMC (Full-Fledged Money Changer)<\/li>\n<li>Licensed by RBI<\/li>\n<li>FFMC franchise agent<\/li>\n<\/ul>\n<\/td>\n<td width=\"381\">\n<p>Cash withdrawal is made only for the purpose of foreign currency for:-<\/p>\n<ul>\n<li>Foreign tourists<\/li>\n<li>Non-residents visiting India<\/li>\n<li>Resident Indians on their return to India<\/li>\n<li>According to the RBI directions or guidelines.<\/li>\n<li>Not eligible if cash withdrawal is made for the purpose of disbursement of inward remittances by these persons under Money Transfer Service Scheme of RBI.<\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n<p>CBDT also pronounces that the person (payer), which comprises any bank (both public and private), a co-operative bank, and the post office will deduct TDS under Section 194N, making the cash payment.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Easy Explanation with Examples<\/h3>\n\n\n\n<p>If the aggregate amount of cash withdrawal during the previous year by a member from one or another of his bank or post office account goes beyond Rs. 20 Lakhs, then only the \u2018TDS under Section 194N\u2019 tax, will be required to be deducted. It is also subjected to condition that the said person has not filed his Income Tax Returns for the last three years.&nbsp;<\/p>\n\n\n\n<table class=\"table table-bordered\">\n<tbody>\n<tr>\n<td width=\"149\">\n<p><strong><em>TDS Rate<\/em><\/strong><\/p>\n<\/td>\n<td width=\"467\">\n<p><strong><em>Cash withdrawal limit<\/em><\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"149\">\n<p>&nbsp;<\/p>\n<\/td>\n<td width=\"467\">\n<p>Payer has not filed&nbsp;tax returns for last 3 years &amp; due date for filing tax return has expired<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"149\">\n<p><strong>2%<\/strong><\/p>\n<\/td>\n<td width=\"467\">\n<p>Beyond Rs. 20 lakh but not considerable Rs. 1 crore<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"149\">\n<p><strong>5%<\/strong><\/p>\n<\/td>\n<td width=\"467\">\n<p>Beyond Rs. 1 crore<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"149\">\n<p>&nbsp;<\/p>\n<\/td>\n<td width=\"467\">\n<p><strong>Other Payers<\/strong><\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"149\">\n<p><strong>0%<\/strong><\/p>\n<\/td>\n<td width=\"467\">\n<p>Till Rs. 1 crore<\/p>\n<\/td>\n<\/tr>\n<tr>\n<td width=\"149\">\n<p><strong>2%<\/strong><\/p>\n<\/td>\n<td width=\"467\">\n<p>Beyond Rs. 1 crore<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n<p><strong>Example A1:<\/strong>&nbsp;No\nTDS will be applicable if Mr. \u2018A\u2019 withdraws cash up to Rs. 1 Crore, and has\nfiled all his returns.<\/p>\n\n\n\n<p><strong>Example A2:<\/strong>&nbsp;TDS\nwill be applicable if in case Mr. \u2018A\u2019 with only 2% if he withdraws cash that is\nmore than Rs. 1 Crore<\/p>\n\n\n\n<p><strong>Example B1:<\/strong>&nbsp;In\nother cases, TDS will be applicable at the rate of 2% if Mr. \u2018B\u2019 withdraws cash\nfrom \u2018Rs. 20 Lakh to Rs. 1 Crore\u2019 and has not filed all his returns.<\/p>\n\n\n\n<p><strong>Example B2:<\/strong>&nbsp;TDS\nwill be applicable at the rate of 5% if Mr. \u2018B\u2019 withdraws cash which is beyond\nRs. 1 Crore&nbsp;<\/p>\n\n\n\n<p><strong>Illustrations:<\/strong>\u00a0TDS will be deducted by the spender to the payee while providing the cash payment beyond Rs 1 crore in a particular fiscal year. Once the total sum is withdrawn exceeds Rs 1 crore in a financial year, the payer will have to deduct TDS from the amount if the payee withdraws a sum of money on consistent intervals.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>These are just an evaluation, and we always motivate our readers to examine the subject in-depth based on the stated case laws and amended rules\/decided judicial decisions consequently. With this, the group of <a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong><\/a> has experienced professionals to help you with the process of Income-tax fillings and tax exemptions parameters. Our expert will ensure the successful and favorable completion of your work. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/procedure-and-due-dates-of-filing-tds\/\">\nTDS Returns Filing: Due Dates and Procedure for Filing\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Finance Minister in the \u2018Union Budget 2019\u2019 has presented Section 194N for \u2018deduction of tax at source (TDS)\u2019 on cash withdrawals exceeding Rs. 1 crore, which will be valid from July 1, 2020. By way of this, the Finance Act, 2020, has tightened up the existing provisions for those who have not completed income [&hellip;]<\/p>\n","protected":false},"author":20,"featured_media":11744,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[153,237],"tags":[712],"acf":{"service_id":"51"},"authorName":"Archita Bhattacharjee","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/WhatsApp-Image-2020-03-18-at-11.26.19-AM-1.jpeg","authorDescription":"Archita Bhattacharjee is working as Legal Analyst (Team Lead, Research &amp; Development) at Corpbiz and has proving experience about 2 years as Corporate Legal Researcher in law firms as well as Rajya Sabha and authors in diverse publications. She has refined her skills by representing India in Paris, France and the University of Leiden over implications of International Humanitarian and Criminal Law being certified member of many Legal Centers.","postViews":9314,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/11738"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/20"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=11738"}],"version-history":[{"count":20,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/11738\/revisions"}],"predecessor-version":[{"id":24463,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/11738\/revisions\/24463"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/11744"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=11738"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=11738"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=11738"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}