Sec 194n tds deducted in bank account

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This discussion clarifies Section 194N of the Income Tax Act concerning TDS on cash withdrawals. It explains the deduction limits, which vary based on prior tax filing history and withdrawal amounts, with rates of 2% and 5%. The correct journal entry for recording TDS deducted under this section is provided, along with confirmation that the deducted TDS amount can be claimed when filing your Income Tax Return.

Kollipara Sundaraiah

Kollipara Sundaraiah (Querist)

09 December 2021 Sir,
It assessee cash withdrawal rs:1,50,000/- dt: 20-11-21 sec 194n tds deducted rs:3000/- @2 percent debited to bank account.
Question:
1.sec 194n tds deducted limit
2.accounting entry passed procedure in books
3.sec 194n tds deducted amount claim allowed.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

09 December 2021 1. The payer will have to deduct TDS at the rate of 2% on the cash payments/withdrawals of more than Rs 1 crore in a financial year under Section 194N.

In case the individual receiving the money has not filed income tax return for three years immediately preceding the year, then the limit of tax deduction is Rs 20 lakh.
The TDS will be deducted at:
-2% on the cash payments/withdrawals of more than Rs 20 lakh and up to Rs 1 crore, and
-5% for withdrawal exceeding Rs 1 crore.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

09 December 2021 2. Dr. Cash ......... Rs. 1,47,000/-
Dr. TDS deducted Rs. 3,000/-

Cr. Bank ........ Rs. 1,50,000/-

3. Yes, TDS deducted u/s. 194N can be claimed while filing relevant ITR.

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