New TDS rates on high-value cash withdrawals apply from 01st July 2020

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 In order to bring the non filers into the bracket of Income tax filing (ITR) despite earning taxable income and discourage cash transactions, the Finance Act 2020 introduced TDS (tax deducted at source) rates on cash withdrawals for those who do not file ITR. The rates are applicable from 1st July 2020.

Those who have not filed Income tax returns for the past three financial years will have to pay TDS at the rate of 2%, if the amount withdrawn from the bank is above ₹20 lakh but doesn’t exceed ₹1 crore in a financial year.

If those who do not file ITR, the amount withdrawn exceeds ₹1 crore, TDS will be deducted at the rate of 5% under Section 194N of the Income-tax Act, 1961.

However, if you withdraw cash above one crore in a Financial year, you will still have to pay TDS whether you file Income tax or not. In July 2019, the ministry, through Section 194N, had first introduced TDS at the rate of 2% on cash withdrawals above one crore in a FY. This continues to be applicable

“In case, the individual does not submit the PAN to their respective banker or financial institution, then a TDS at a higher rate of 20% will become applicable.


If you need any further clarification, please contact us for free consultation.

 

PA Associates

4A, First Floor,

Vimala nagar first main road,

Medavakkam,

Chennai – 600100.

8754472172 / www.paassociate.in

Location: 4A, 1st Cross St, Munusamy Nagar, Vimala Nagar, Medavakkam, Chennai, Tamil Nadu 600100, India

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