NEW DELHI :
Those who have withdrawn ₹one crore or more in cash from banks or post offices upto 31 August will be liable to a 2% tax deducted at source (TDS) on further cash withdrawals from 1 September as a new provision in tax law kicks in from next month, the government said on Friday.
Central Board of Direct Taxes (CBDT) said in a clarification that as per the TDS provision introduced in Finance (2) Act of 2019, the withdrawals made so far this fiscal will count in computing the ₹1 crore threshold for the levy. The provision imposes TDS on total cash payments above ₹one crore by banks, cooperative banks or post office to any person from one or more accounts.
However, since the provision comes into effect only from 1 September, cash withdrawal prior to that will not be subjected to TDS, although it will be counted in computing the threshold for the whole year.
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. The 2% TDS is one such step.
The CBDT also said in a separate statement that it has set up a five member dedicated cell led by a CBDT member for addressing the specific tax problems faced by start-ups. The start-up cell will work towards redressal of grievances with respect to administration of the income tax law, said the statement.