The Revenue Department on Friday informed that the two per cent tax deduction at source (TDS) on cash withdrawal of over Rs 1 crore within a year will come into effect from September 1.
"If a person has already withdrawn Rs. 1 crore or more in cash up to August 31, 2019, from one or more accounts maintained with a banking company or a cooperative bank or a post office, the two per cent TDS shall apply on all subsequent cash withdrawals," an official statement said.
However, it also clarified that any cash withdrawal prior to September 1, 2019, will not be subjected to the TDS.
"Since the threshold of Rs 1 crore is with respect to the previous year, calculation of the amount of cash withdrawal for triggering deduction under section 194N of the Act shall be counted from April 1, 2019," the statement said.
The government introduced the tax in order to discourage cash transactions and move towards a cash-less economy.
"The Finance Act, 2019 has inserted a new section 194N in the Income-tax Act,1961, to provide for levy of tax deduction at source (TDS) at 2 per cent on cash payments in excess of one crore rupees in aggregate made during the year," it added.
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