In a significant development, the Central Board of Direct Taxes (CBDT) has issued Notification No. 123/2024, dated November 28, 2024, exempting specific foreign representations and international organizations from the provisions of Section 194N of the Income-tax Act, 1961.
Under this exemption, entities such as diplomatic missions, United Nations agencies, consulates, and honorary consuls, which enjoy tax exemptions under the Diplomatic Relations (Vienna Convention) Act, 1972, and the United Nations (Privileges and Immunities) Act, 1947, will not be subject to the TDS provisions under Section 194N. This section mandates tax deduction on cash withdrawals exceeding a prescribed limit.
The notification, issued in consultation with the Reserve Bank of India, comes into effect from December 1, 2024. This move ensures that the operational requirements of exempt organizations are streamlined without the burden of compliance with cash withdrawal taxes.
For taxpayers, the notification reaffirms the government's commitment to aligning tax policies with international protocols and diplomatic obligations.
Key Highlights of Notification No. 123/2024
- Applicability: Diplomatic Missions, UN Agencies, and Consulates approved by the Ministry of External Affairs.
- Exemption Basis: Vienna Convention Act, 1972, and United Nations (Privileges and Immunities) Act, 1947.
- Effective Date: December 1, 2024.
This notification is part of the broader efforts by the Ministry of Finance to provide clarity and ensure fairness in taxation, especially for entities engaged in fostering international cooperation.
Official copy of the notification has been attached
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