Budget 2023-24: Increasing threshold limit for co-operatives to withdraw cash without TDS



Quick Summary
The government has announced an increase in the cash withdrawal threshold for co-operative societies without Tax Deducted at Source (TDS). From April 1st, 2023, co-operatives can withdraw up to £3 crore in cash annually, a significant rise from the previous £1 crore limit. This change aims to ease cash handling for these organisations.

Section 194N of the Act provides that a banking company or a co-operative society engaged in carrying on the business of banking or a post office, which is responsible for paying any sum to any person (referred to as the recipient) shall, at the time of payment of such sum in cash, deduct an amount equal to two per cent of such sum, as income-tax. The requirement to deduct tax applies only when the payment of amount or aggregate of amount in cash during the year exceeds one crore rupees.

2. However, in case of a recipient who is a non-filer tax is to be deducted at the rate of 2% on any sum exceeding Rs. 20 lakh but not exceeding Rs. 1 crore in aggregate during the financial year and, at the rate of 5% on sum exceeding Rs. 1 crore in aggregate during the financial year.

3. Non-filer means a recipient who has not filed any income-tax return for all of the three assessment years relevant to the three previous years immediately preceding the previous year in which such payment is received.

4. It is proposed to amend section 194N of the Act by inserting a new proviso to provide that where the recipient is a co-operative society, the provisions of this section shall have effect, as if for the words “one crore rupees”, the words “three crore rupees” had been substituted.

5. This amendment will take effect from 1st April, 2023.

[clause 85]

FAQ :

The new limit for co-operative societies to withdraw cash without TDS is £3 crore per financial year.

The previous limit for cash withdrawals without TDS for co-operatives was £1 crore.

This amendment takes effect from 1st April 2023.

This change specifically affects co-operative societies engaged in the business of banking.

TDS stands for Tax Deducted at Source. It's a tax deducted by the payer at the time of making specified payments.




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Finance news reporter covering taxation, GST, income tax, business compliance, and economy updates. I simplify complex financial topics into easy-to-understand articles for professionals, taxpayers, and business owners on leading finance and tax platforms.

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