Sec 194N: TDS on Cash Withdrawal exceeding Rs 1 crore from banks or cooperative bank or post office

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With a view to encourage the cashless economy, it is proposed to insert a new section
194N in the Act to provide for levy of TDS @ 2% on cash payments in excess of Rs. 1 crore in aggregate made during the year, by a banking company or co-operative bank or post office, to any person from an account maintained by there recipient. Exemption from this provision would be granted to certain recipients such as the Government, banking company, cooperative society engaged in carrying on the business of banking, post office, banking correspondents and white label ATM operators, who are involved in the handling of substantial amounts of cash as a part of their business operation. Central government would be empowered to grant such exemption to more recipients by the way of Gazette Notification

Category of persons
(i) A banking company to which the Banking Regulation Act, 1949 applies;
(ii) A co-operative society engaged in carrying on the business of banking;
(iii) A post office

Applicability
The person specified above who is responsible for paying any sum, or 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.This provision is applicable from 01/09/2019.

Rate of tax
TDS is deductible at the time of payment of such sum at the rate of 2% of sum exceeding one crore rupees, as income-tax:

Exception
However section 194N shall not apply to any payment made to,
(i) The Government;
(ii) Any banking company or co-operative society engaged in carrying on the business of banking or a post office;
(iii) Any business correspondent of a banking company or co-operative society engaged in carrying on the business of banking, in accordance with the guidelines issued in this regard by the Reserve Bank of India under the Reserve Bank of India Act, 1934;
(iv) Any white label automated teller machine operator of a banking company or co-operative society engaged in carrying on the business of banking, in accordance with the authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007;
(v) Such other person or class of persons, which the Central Government may, by notification in the Official Gazette, specify in consultation with the Reserve Bank of India.


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