This discussion clarifies the application of TDS under Section 194N on cash withdrawals for newly incorporated businesses. Despite a client's recent incorporation and filing, their bank deducted TDS at 2%. The bank stated no exemptions apply to new firms, referencing the Income Tax Department's stance. The core issue is whether Section 194N offers specific relaxations for new entities, with a mention that TDS is generally not applicable up to ₹1 crore for cash withdrawals if a PAN is provided.
Bank has dedcuted TDS on cash withdrwal@ 2% on cash withdrwal during the year 2023-24 even though My client has newly incporporated in the Last year i.e FY 2022-23 only and filed income tax return in the last year i.e 2022-23 1st time my client have given letter to bank as TDS u/s 194 N not applicable to us as we are newly incorpated not to deduct tds even though tds deducted by bank aslo bank has mailed to my client that No relaxation has been given by income tax department to newly established firm. Hence tax will be applicable on cash withdrawal in excess of 20Lakh. Kindly refer section 194N for more details.
please clarify this section nothing mentioned in the section that its relaxation for newly incorporated