Update: On October 15, 2019 the following clarification was provided by CBDT:
Using the power provided in clause (v) of proviso to section 194N CBDT has mentioned certain people to whom provisions of section 194N shall not be applicable.
- Authorized dealer and its franchise agent and sub agent.
- Full Fledged Money Changer (FFMC) licensed by Reserve Bank of India and its franchise agents.
and such benefit will only be applicable on separate bank accounts maintained by them for:
(i) Purchase of foreign currency from foreign tourists or non-residents visiting India or from resident Indians on their return to India, in cash as per the directions or guidelines issued by Reserve Bank of India; or
(ii) disbursement of inward remittances to the recipient beneficiaries in India in cash under Money Transfer Service Scheme (MTSS) of the Reserve Bank of India
and they shall issue a certificate to bank that money withdrawn above shall be only used for the purpose mentioned above.
Here authorized dealer means a person authorized as an authorized dealer under sub section 1 of section 10 of Foreign Exchange Management Act.
On 30th August 2019 CBDT released a press statement where it gave answers to various questions of people with regard to applicability of section 194N i.e. TDS on cash withdrawal from bank.
The clarification says that this TDS shall apply from 01.09.2019 i.e. any withdrawal before 01.09.2019 wont be liable for deduction of TDS but since this section is applicable for whole Financial Year therefore if a person has withdrawn Rs. 1 crore from all accounts maintained with same bank prior to 1st September 2019 then TDS would be deducted @2% on all subsequent withdrawal.
This TDS is going to be a great pain for many big companies who need to withdraw huge cash during the year for their petty cash and even to pay their daily wage worker and now may be people would start maintaining multiple bank accounts because this limit is applicable per bank.
Also many people are worried on how to show this in their return of income as its not an income its just cash withdrawal on which TDS has been deducted rest all sections of TDS are mainly income from various sources. Let’s wait for the clarification on same from CBDT.
Link for the press release: //www.incometaxindia.gov.in/Lists/Press%20Releases/Attachments/793/Press-Release-Clarification-on-applicability-of-TDS-on-cash-withdrawals-dated-30-08-2019.pdf
Link for amendment on 15th October: notification 80/2019.pdf
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