(Applicable from 1 September 2019)

 

As per section 194N

TDS is to be deducted by

  1. Banking Company
  2. Cooperative Society engaged in business of banking
  3. Post office
    at 2% on cash withdrawals exceeding Rs. 1 crore 
SECTION DESCRIPTION CUTOFF RATE OF TDS
194N TDS on cash withdrawals Rs. 1 crore 2%

 

Example 1

Suppose a person has an account in ICICI Bank.He has already withdrawn Rs. 99 lakh

He further withdraws Rs. 1 lakh

Whether TDS to be deducted?

Answer

No TDS to be deducted as cash withdrawals do not exceed Rs 1 crore

 

Example 2

Suppose in above example he further withdraws Rs 150000. Whether TDS to be deducted? If yes,on what amount

Answer

Yes, TDS to be deducted as cash withdrawals exceeds Rs 1 crore.

TDS will be dedcuted on Rs. 50000

TDS amount Rs. 50000 * 2% = 1000

Net payment received from bank= Rs.150000 - 1000 = 149000

  1. Income Tax
  2. Tax Deducted at Source (TDS)

About the Author

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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 10 years. He also provides Accounts Tax GST Training in Delhi and Pune.