Credit of TDS u/s 194N shall be available to deductee in year of deduction: CBDT
The basic rule for TDS credit is that TDS
credit is available in the year in which income in respect of such TDS is assessable to tax.
Section 194N deals in deduction of tax at source by a banking company or co-op. bank or post office at the rate of 2% from the amount withdrawn in cash from any account (saving or current account) if aggregate of amount withdrawn from one or more accounts exceeds Rs. 1 crore during the previous year.
CBDT has issued a clarification for the same now, as under :
Notification No. 74/F. No. 370142/18/2019-TPL –
Rule 37BA of the Income-tax Rules, 1962, provides that the credit for the tax deducted at source shall be given to the person to whom payment has been made or credit has been given. Such credit shall be allowed in the year in which income is assessable to tax.
It also provides that where the income is assessable in the hands of a person other than the deductee, credit shall be allowed to such other person on filing of a declaration by the deductee to the deductor.
Now, the CBDT has inserted a new sub rule (3A) to provide that the credit for the tax deducted at source from cash withdrawal under section 194N shall be allowed to the person from whose account it has been deducted. Further, such credit shall be allowed in the year of deduction.