TDS on Cash Withdrawals u/s 194N

This document covers

1. Persons responsible to deduct TDS
2. Rate of TDS and Threshold for deduction
3. Time of Deduction of TDS
4. Payee or Deductee
5. Non-Applicability of TDS u/s 194N
6. Due Date for TDS Payment
7. TDS Returns

1. Persons responsible to deduct TDS(Deductor)

The following persons are required to deduct TDS on the cash withdrawals exceeding Rs 1 crore during the financial year

1. Banking Company
2. A Co-operative society engaged in carrying on the business of banking
3. A Post office

2. Rate of TDS and Threshold for deduction

1. If the taxpayer has filed his income tax returns regularly : TDS is required to be deducted at 2% on the total cash withdrawal exceeding Rs 1 crore
   EXAMPLE : Mr Ram is having a account in a bank and he is regularly filing his income tax returns. He has withdrawn Rs 60 lakhs in 1 branch on 21 st July 2021 and Rs 80 lakhs in another branch on 31 st Oct 2021. His Total Withdrawal is 1.4 crores. TDS required to be deducted is as follows

   ---

   Total withdrawal - 1.4 crores

   Less : Threshold : 1 crore

   Amount exceeding Rs 1 crore - 40 lakhs

   TDS @ 2% - 80,000

2. If the taxpayer is not filing his income tax returns regularly : If the taxpayer has not furnished the any of the 3 previous financial years income tax returns, the TDS needs to be deducted as follows
   • If the cash withdrawal is > Rs 20 lakhs and <= Rs 1 crore – TDS is 2%
   • If the cash withdrawal is > Rs 1 crore – TDS is 5%
   EXAMPLE CONTINUED : In above example, if Mr Ram has not filed his income tax returns, the TDS is as follows

   ---

   (> Rs 20 lakhs and <= Rs 1 crore)     (Rs 80 lakhs * 2%) = Rs 1,60,000

   (> Rs 1 crore)     (Rs 40 lakhs * 5%) = Rs 2,00,000

   Total TDS to be deducted by the bank is (1,60,000 + 2,00,000) = 3,60,000

3. Time of Deduction of TDS

TDS needs to be deducted at the time of payment of such sum

4. Payee or Deductee

TDS deduction on cash withdrawal done by the following persons

• Individual
• HUF
• Company
• Firm / LLP
• Local Authority
• AOP or BOI

5. Non-Applicability of TDS u/s 194N

TDS u/s 194N is not applicable on the payments made to

• Government
• Banking company or co-operative society engaged in carrying on the business of banking or a post office
• Any business correspondent of a banking company or co-operative society engaged in carrying on the business of banking
• Any white label ATM operator of a banking company or co-operative society engaged in carrying on the business of banking

6. Due Date for TDS Payment

The due date for payment of TDS deducted u/s 194J is within 7 days from the end of the month in which deduction is made. However, for the March month, due date is April 30

7. TDS Returns

• TDS Returns needs to be filed in Form 26Q for all persons except the individuals or HUF who are not liable to Audit
• TDS Return filing is Quarterly
• The due date for the TDS Returns are as follows
  • April to June – July 31
  • July to September- October 31
  • October to December – January 31
  • January to March – May 31
• TDS Certificates needs to be issued within 15 days from the date of filing in Form 16A