Who is required to deduct tax u/s 194N?
Every person, being, -
a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);
a co-operative society engaged in carrying on the business of banking;
or a post office
who is responsible for paying any sum, or, as the case may be, aggregate of sums, in cash, in excess of one crore rupees during the previous year, to any person (herein referred to as the recipient) from one or more accounts maintained by the recipient with it.
Who is the Payee?
TDS deduction on cash withdrawal u/s 194N is applicable to all taxpayers, including
An Individual
A Hindu Undivided Family (HUF)
A Company
A partnership firm or
an LLP
A local authority
An Association of Person (AOPs) or
Body of Individuals (BOIs)
Are there any exemptions to TDS on cash withdrawal u/s 194N?
No tax shall be deducted if amount is withdrawn from the bank or post office by following recipients:
Central or State Government
Banks
Co-operative Banks
Post Office
Banking correspondents
White label ATM operators
Other persons notified by the Govt. in consultation with the RBI Notification 70/2019: TDS not required on payments to registered commission agent or trader, operating under Agriculture Produce Market Committee (APMC) who has certified that the cash withdrawal is for the purpose of making payments to the farmers on account of purchase of agriculture produce.
When to Deduct TDS under Section 194N?
At the time of payment of such sum
Rate & Threshold limit of TDS under Section 194N
The recipient cannot apply for lower deduction certificate u/s 197 and cannot furnish form no. 15G/15H.
This section also applies to Non-resident.
Applicability of this Section
In case you have two accounts in same branch and same bank - For the purpose of calculation of threshold limit of Rs. 1 crore, the aggregate amount of cash withdrawn from one or more accounts during the previous year shall be considered. The tax shall be required to be deducted only after 01st September 2019.
In case amount withdrawn from different branches of same bank - The limit of Rs 1 crore has to be seen for cash withdrawals made from all branches of a bank.
If amount withdrawn from different banks – Limit of Rs.1 crore applies to each bank