Earlier the Tax Deduction was applicable only at the time of payment made by the payer to the receiver. But after the announcement of the finance act 2019, Now TDS will also be applicable at the time of withdrawal of cash. TDS will be deducted by the Bank i.e. the payer. However, there is a threshold limit for withdrawal of cash up to which no TDS will be deducted from the payment of cash. The Provision of deduction of TDS from cash payment is included in section 194N which has been introduced by Finance Act 2019. The rate of Deduction of TDS under this section is 2 percent. Let’s discuss this section in more details:
Who will be the Payer?
Who will be the Receiver?
Any Person Except:
Cases Where TDS will not be deducted.
Rates of TDS where Return of Income is not filed by Assessee for preceding 3 years.
Other Points relevant for this Section
Some FAQ’s on Section 194N
No, only Preceding 3 years ITR will be counted for this section. Current Assessment years ITR will be counted from the Next Year. For Example for the financial year 2020-21, ITR for the preceding 3 years which are 2019-20, 2018-19, 2017-18 shall be taken into consideration for the availing of non-deduction of TDS.