Get ready to pay 2 per cent TDS (tax deducted at source) on all your transactions if you have withdrawn Rs 1 crore or more in cash up to August 31, this fiscal.
The revenue department on Friday said the 2 per cent TDS on cash withdrawals of over Rs 1 crore in a financial year will come into effect from September 1.
According to the Central Board of Direct Taxes (CBDT), if a person has already withdrawn Rs 1 crore or more in cash up to August 31 this financial year from one or more accounts maintained with a banking company or a cooperative bank or a post office, the 2 per cent TDS shall apply on all subsequent cash withdrawals.
The government, in the Union Budget, had made the provision of levying 2 per cent TDS on cash withdrawals exceeding Rs 1 crore in a financial year, with an aim to discourage cash transactions and move towards a less cash economy.
The government has been taking various steps to discourage use of cash and to promote digital payments to establish a trail of transactions in the economy and to check generation of unaccounted wealth.
Following queries regarding the levy of the TDS, the CBDT clarified that the provision “is to come into effect from September 1, 2019”.
Hence, cash withdrawals exceeding Rs 1 crore prior to September 1, 2019 will not be subjected to the TDS.
“However, since the threshold of Rs 1 crore is with respect to the previous year, calculation of amount of cash withdrawal for triggering deduction under Section 194N of the Finance Act shall be counted from April 1, 2019,” the CBDT said in a statement.