Cash withdrawal before 1/09/2019 won’t be subjected to TDS u/s 194N but same shall be counted in limit of Rs. 1 Cr. : CBDT
Press Release, dated 30-08-2019
In order to discourage cash transactions and move towards less cash economy, the Finance (No. 2) Act, 2019 has inserted a new section 194N in the Income-tax Act, 1961 to provide for levy of tax deduction at source (TDS) at the rate of 2 percent on cash payments in excess of one crore rupees in aggregate made during the year, by a banking company or cooperative bank or post office, to any person from one or more accounts maintained with it by the recipient.
Since the section 194N is applicable with effect from September 1, 2019, a few queries were received from the general public on the applicability of this section on withdrawal of cash from 01.04.2019 to 31.08.2019.
The Central Board of Direct Taxes (CBDT) has clarified that any cash withdrawal prior to 1st September, 2019 will not be subjected to the TDS under section 194N. However, since the threshold of Rs. 1 crore is with respect to the previous year, calculation of amount of cash withdrawal for triggering deduction under section 194N shall be counted from 1st April, 2019.