Tax Deduction at Source Applicable On Cash Withdrawals In Excess Of Rs. 1 Crore
GUWAHATI: As per the recent amendments to the Income Tax Act, 1961 guidelines in regard to cash withdrawals made from one or more accounts during a financial year, Tax Deduction at Source (TDS) of two percent (2%) is applicable on cash withdrawals made in excess of Rs. 1 crore in aggregate through a bank, co-operative bank or post office from September 1, 2019.
Further it has been clarified that any cash withdrawal prior to September 1, 2019 will not be subject to TDS under provisions of the Act.
However, since the threshold of Rs. 1 crore is with respect to the financial year, calculation of amount of cash withdrawal for triggering deduction of TDS for the current financial year (F.Y. 2019-20), shall be considered from April 1, 2019.
Thus, if a person has already withdrawn Rs. 1 crore or more in cash upto August 31, 2019 from one or more accounts maintained with a banking company, co-operative bank or post office, the two percent TDS shall apply on all subsequent cash withdrawals.
Following are the list of persons and entities who are exempt from TDS on cash withdrawal:
i. The Government
ii. Any banking company or co-operative society engaged in carrying on the business of banking or a post office
iii. Any white label automated teller machine operator of a banking company or co-operative society engaged in carrying on the business of banking, in accordance with the authorization issued by the Reserve Bank of India
iv. Any business correspondent of a banking company or co-operative society engaged in carrying on the business of banking
v. Such other person(s) as the Central Government may notify.