2% TDS on cash withdrawal in excess of Rs 1 crore in a year to be levied from September 1

New Delhi : The budget decision to levy a 2% tax deduction at source (TDS) on cash withdrawal in excess of Rs 1 crore in a year will be applicable from September 1, the Central Board of Direct Taxes (CBDT) clarifies on Friday.

The 2% tax deduction at source will, however, be applicable from day one on all such cases where a person has already exhausted the Rs 1 crore limit for 2019-20, according to a statement issued by CBDT.

Central Board of Direct Taxes said that it had issued the clarification after it receiving “queries” from “the general public through social media on the applicability of this section on withdrawal of cash from 01.04.2019 to 31.08.2019”.

Having considered the “concerns of the people”, the direct tax board clarified the budget provision “is to come into effect” from September 1, 2019. “Hence, any cash withdrawal prior to 1st September, 2019 will not be subjected to TDS under Section 194N of the Act,” the statement said.

“However, since the threshold of Rs 1 crore is with respect to the previous year [with reference to the assessment year 2020-2021] under the Income Tax Act, calculation of amount of cash withdrawal for triggering deduction under section 194N of the Act shall be counted from 1st April, 2019,” it said.

“Hence, if a person has already withdrawn Rs 1 crore or more in cash upto 31st August, 2019 from one or more accounts maintained with a banking company or a cooperative bank or a post office, the two per cent TDS shall apply on all subsequent cash withdrawals,” it clarified.

 

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