Page 24 - Union Budget_2019

Union Budget 2019
TAX DEDUCTED AT SOURCE

5.1 TDS on cash withdrawal to discourage cash transaction

To take a further step towards less cash economy, it is proposed to insert a new Section 194N, the provisions
of which are as follows: -

Charging • Levy of TDS at the rate of 2%

Provision • On cash payments in excess of one crore rupees in aggregate made during the year,
• By a banking company to which Banking Regulation Act, 1949 applies (including

corresponding new bank of SBI, regional rural bank or any subsidiary bank) or
cooperative society engaged in the business of banking or post office, to any person

from an account maintained by the recipient.
Exemptions • Payment made to Government, banking company, co-operative society engaged in the

business of banking, post office, business correspondents of a banking company or co-
operative society engaged in business of banking

• White label ATM operators involved of banking company or co-operative society
engaged in business of banking, handling substantial cash as part of its business
operations

• Central Government may exempt other person through notification in official Gazette
in consultation with Reserve Bank of India.

This amendment will take effect from 1st September, 2019.

The proposed amendment shall have a check on the withdrawals made by a person and would further
discourage cash transactions and promote digital payments.

5.2 Online filing of application seeking determination of TDS on payment to non-residents

According to Section 195(2), if a person who makes payment to non-resident (other than salary)

• considers that the whole of such payment would not be taxable in the hands of recipient,

• he/she can make an application to the Assessing Officer ("AO") to determine the appropriate taxable

portion and deduct TDS accordingly.

This provision is used to obtain certificate/order from the AO for lower or no withholding of taxes.
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