New Delhi: The revenue department on Friday said the 2% tax deduction at source (TDS) on cash withdrawals of over Rs 1 crore will come into effect from 1 September.
The Central Board of Direct Taxes (CBDT) further said that if a person has already withdrawn Rs 1 crore or more in cash up to 31 August 2019, in the current fiscal, the two per cent TDS shall apply on all subsequent cash withdrawals.
The government had made the provision of levying 2% TDS on cash withdrawals exceeding Rs 1 crore in the Union Budget with an aim to discourage cash transactions and move towards less cash economy.
After receiving queries regarding the levy of the TDS, CBDT said the provision “is to come into effect from 1 September 2019”.
Hence, any cash withdrawal prior to 1 September 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 1 April 2019,” it said.
Hence, if a person has already withdrawn Rs 1 crore or more in cash up to 31 August 2019 from one or more accounts maintained with a banking company or a cooperative bank or a post office, the two per cent TDS would apply on all subsequent cash withdrawals.
In April, the income tax department had revised Form 16 by adding various details, including income from house property and remuneration received from other employers, thereby making it more comprehensive to help check tax avoidance.
It was revised to include segregated information regarding deductions under various tax saving schemes, investments in tax savings instruments, different allowances received by the employee as well as income from other sources.
Form 16 is a certificate issued by employers, giving details of employees’ TDS (tax deducted at source) usually by mid June and is used in filing I-T returns.