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Income Tax Updates

*TDS on Cash Withdrawal – Amendment In Section 194N* *New rule for Cash withdrawal Effective From 01-07-2020* 1. The Finance Bill 2020 ( Bill) introduced vide Union Budget 2020-21 is passed by both Houses of Parliament, with few amendments on 27th March 2020 and also received President’s assent .

2. One of the amendment which will effect a large number of people is change in scope of TDS on cash withdrawal under sec 194N of Income Tax Act.

3. Clause 84 of Finance Act 2020 For section 194N of the Income-tax Act, the following section shall be substituted with effect from the *1st day of July, 2020*.

4. *Who are liable to deduct?:* *Bank, Co-operative bank or Post Office*

5.*Threshold limit:* If aggregate payment in cash from one or more accounts during a previous year to an account holder exceeds the threshold limit given below:*On or after 01.07.2020*

*Customer who have not filed their tax returns for the previous 3 years* and for which the due date for filing tax return has expired: *a. exceeding Rs. 20 lakh but not exceeding Rs. 1 crore:-TDS Rate-2%* *b. exceeding Rs. 1 crore:- Rate-5%*

*Customers other than mentioned above:* *a. up to Rs. 1 crore:- 0%* *b. exceeding Rs. 1 crore:-. 2%*

The applicability of new provision as per amendments in the Finance Act 2020. The cash withdrawal limit for this F/Y will be considered from 01.04.2020.

*Deductible: Tax is deductible at the time of payment of cash*.

6. *Non Applicability* : Sec 194N will not apply to withdrawals made by following taxpayers:- *Government Body* *Bank including co-operative banks* *Business correspondent of a banking company* *White label ATM operator of any bank*

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