In order to discourage cash transactions and move towards less cash economy, Section 194N was inserted vide Finance Act, 2019 (No.2). Following table shows the summarised details of the said section
Section |
194N |
W.e.f |
01-09-2019 |
Deductor |
a) Any Banking company
b) A co-operative Bank
c) A post office,
|
Deductee |
Any person except following a) Any government body
b) Any bank including co-operative banks
c) Any business correspondent of a banking company (incl. co-operative banks)
d) Any white label ATM operator of any bank (incl. co-operative banks)
e) Any other person notified by the government
|
Transaction |
Cash Withdrawals |
Threshold |
Rs. 1 crore (TDS will be deducted on the amounts withdrawn in excess of Rs. 1 crore) |
Rate |
2% |
Time of deduction |
At the time of withdrawal |
New Update
The Finance Act 2020 has extended the scope of the section to include persons who have not filed their Income tax returns for immediate preceding 3 Assessment Years.
With effect from 01-07-2020, if the recipient(deductee) has not filed ITR for all the 3 immediate preceding Assessment Years following will be rates of TDS u/s 194N for such person:
Withdrawal Amount |
Rate |
0 to Rs. 20 lakhs |
0% |
Rs. 20 Lakhs to Rs. 1 Crore |
2% |
Above Rs. 1 Crore |
5% |