TDS on Cash Withdrawals
Finance Act 2019 introduced section 194N TDS on cash withdrawal of Income Tax Act 1961. This section is applicable to cash withdrawals made by person during a financial year.
This section will apply to all the sum of money, or an aggregate of sums withdrawn by a particular taxpayer in a financial year.
The section will apply to withdrawals made by any taxpayer including:
- Individual
- Hindu Undivided Family
- Company
- Partnership Firm / LLP
- Association of Person / Body of Individuals
This section shall not apply to any payment made to:
- Government
- Any Bank (Private / Public)
- Co-operative Bank
- Post Office
- White Label ATM Operators
- Business Correspondents
- APMC
- Any other person notified by Government of India
As per Section 139AA of Income Tax Act 1961 and in accordance with the guidelines issued by Central Board of Direct Taxes, it was mandatory to link Aadhaar with PAN by June 30, 2023, failing which the PAN becomes inoperative from 1st July 23. TDS at a higher rate of 20% will be applicable on cash withdrawals for customers with inoperative PANs.
The Budget 2023 has revised the threshold limit for annual cash withdrawals for co-operative societies from Rs. 1 Crore to Rs 3 Crores.
Tax slab for customers other than Co-operative Societies
|
Aggregate Cash Withdrawal in a Financial Year |
TDS Rates, if ITR of last 3 years filed within due date |
TDS Rates, if ITR of last 3 years not filed / filed after due date |
|
Up-to Rs. 20 Lakhs |
Nil |
Nil |
|
Rs. 20 Lakhs to Rs. 1 Crore |
Nil |
2% (20% if PAN not available) |
|
Above 1 Crore |
2% (20% if PAN not available) |
5% (20% if PAN not available) |
Tax slab for Co-operative Societies
|
Aggregate Cash Withdrawal in a Financial Year |
TDS Rates, if ITR of last 3 years filed within due date |
TDS Rates, if ITR of last 3 years not filed / / filed after due date |
|
Up-to Rs. 20 Lakhs |
Nil |
Nil |
|
Rs. 20 Lakhs to Rs. 1 Crore |
Nil |
2% (20% if PAN not available) |
|
Rs. 1 Crore to Rs. 3 Core |
Nil |
5% (20% if PAN not available) |
|
Above Rs. 3 Crores |
2% (20% if PAN not available) |
5% (20% if PAN not available) |