SECTION 194N-TDS ON CASH WITHDRAWAL

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SECTION 194N-TDS ON CASH WITHDRAWAL
Category: Income Tax, Posted on: 31/01/2024 , Posted By: SUMIT BIHANI

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Section 194N of the Income Tax Act, 1961, deals with the deduction of tax at source (TDS) on cash withdrawals exceeding certain thresholds from a banking company, a co-operative society engaged in carrying on the business of banking, or a post office.

Section	Nature of payment	Payer	Payee	Rate
194N	Cash Withdrawal from Bank, Co-op, Post Office	Bank, Co-op, Post Office	Any Person	2% (Refer Point 3)

Additional Points

1. 1. TDS is required to be deducted only at the time of Payment.

2. 2.No TDS if Cash withdraw is up to Rs.1 crore in a Previous Year. If cash withdraws more than Rs 1 Crore than TDS is applicable only on excess amount over Rs. 1 Crore. Where the recipient is a co-operative society limit of Rs.3 crores is applicable for cash withdrawals.

3. In cases where the recipient has not filed income tax returns for the three previous financial years by the due date specified under section 139(1), and this due date has passed before the start of the current financial year, TDS rates will be adjusted as follows:

Cash Withdrawal Amount Range	TDS Rate
More than Rs. 20 lakhs up to Rs. 1 crore	2%
More than Rs. 1 crore	5%

Note: Here we will check return of PY 19-20, PY 20-21, PY 21-22, for the TDS liability for PY 23-24.

4. No TDS if cash withdrawal is made by:

SL. NO	ENTITY/OPERATION	DESCRIPTION
1	Government (SG/CG)	State and Central Government bodies
2	Banks, Cooperative Banks, Post Offices	Including their business correspondents
3	White Label ATM Operators of	-
4	Cash Replenishment Agencies (CRAs)	For withdrawals from accounts maintained exclusively for ATM cash replenishment
5	Registered Commission Agents/Traders under APMC	For withdrawals intended for making payments to farmers
6	Authorized Dealers, FFMC, their Franchise Agents, and Sub-agents	For withdrawals used for purchasing foreign currency for Non-Residents, foreign tourists visiting India, resident Indians returning to India, or for disbursement of inward remittances to beneficiaries in India in cash under the Money Transfer

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