CLARIFICATION NEED FOR TDS U/S 194N OF THE INCOME TAX ACT

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This discussion clarifies the tax treatment for cash withdrawals exceeding ₹20 Lakhs under Section 194N of the Income Tax Act. The query concerns how to declare TDS deducted on business turnover, where cash receipts and payments reflect the wholesale silk business's operations. The consensus suggests selecting 'NA (TDS u/s 194N)' in tax software for reporting these transactions, as cash withdrawals themselves are not income, but rather part of business turnover.

raghavendra b

raghavendra b (Querist)

26 July 2021 DEAR SIR,

ONE OF MY CLIENT UNKNOWINGLY WITHDRAWN MORE THAN 2000000/- LAKHS RS. IN HIS SAVING BANK ACCOUNT. BANK PEOPLE TDS DEDUCTED AS PER U/S 194N. NOW HE DOING WHOLESALE BUSINESS OF SILK. THE TRASACTION IN THE BANK ACCOUNT ALMOST HIS BUSINESS TURNOVER MEANS HE RECEIVED AMOUNT FROM HIS CUSTOMER AND PAYMENTS TOWARDS PURCHASES. NOW WHILE FILING INCOME TAX RETURNS AS PER U/S 198 OF THE INCOME TAX ACT CASH WITHDRAWLS IS NOT AN INCOME. SO WHICH HEAD TO BE SHOWN IN THE RETURNS TO CLAIM THE TDS AMOUNT. IN THE WINMAN SOFTWARE ASKS TDS WHICH HEAD TO BE CONSIDERED, GROSS RECEIPTS OFFERED- 1. BUSINESS/PROFESSION 2.CAPITAL GAIN 3.HOUSE PROPERTY 4. OTHER SOURCES 5. EXEMPT INCOME FINAL RECENTLY INSERTED 6. NA (TDS U/S 194N).

MY QUERY IS WHICH IS SUITABLE FOR SELECT TO FILE THE RETURNS. BECAUSE THE TRANSACTION DEAL WITH HIS BUSINESS TURNOVER. CAN I SELECT LAST OPTION NA ( TDS 194N) OR EXEMPT INCOME OR BUSINESS/PROFESSION.

REGARDS