Central Board of Direct Taxes (CBDT) has released a clarification on 30th August 2019 in which the clarifications have been made regarding the applicability and period for which the limit of cash withdrawal shall be applicable. In order to make the economy to be less cash and discourage the use of cash in the economy, a new section 194N has been introduced in the Finance (No.2) Act to provide for the levy of TDS @ 2% on cash payments by a banking company or post office or cooperative bank to any person from one or more account maintained by the recipients with effect from 1st September 2019.
Now in order to remove the ambiguity regarding the period of the withdrawals, it has been clarified by the CBDT that no TDS shall be applicable on the withdrawals upto 31st August 2019. However, in order to calculate the limit of Rs. 1 Crore, the withdrawals for the period between 1st April to 31st August 2019 shall also to be taken into consideration.
For instance – Mr. X is maintaining an account with State Bank of India. His cash withdrawals are as follows:-
| Months | Amount (in Rs.) | Cumulative amount (in Rs.) |
| Apr-19 | 10,00,000 | 10,00,000 |
| May-19 | 5,75,000 | 15,75,000 |
| Jun-19 | 25,48,000 | 41,23,000 |
| Jul-19 | 15,00,000 | 56,23,000 |
| Aug-19 | 14,50,000 | 70,73,000 |
| Sep-19 | 7,50,000 | 78,23,000 |
| Oct-19 | 3,50,000 | 81,73,000 |
| Nov-19 | 8,50,000 | 90,23,000 |
| Dec-19 | 2,50,000 | 92,73,000 |
| Jan-20 | 6,45,000 | 99,18,000 |
| Feb-20 | 6,25,000 | 1,05,43,000 |
| Mar-20 | 3,25,000 | 1,08,68,000 |
In the aforesaid example, Mr. X has withdrawn Rs. 70,73,000/- till August 2019 and Rs. 1,08,68,000/- in the whole FY. Now, as per the clarification, no TDS shall be deducted by the bank on the cash withdrawals upto the month of August 2019, however the TDS shall be deducted in the month of February 2020 and onwards in which the cumulative amount of withdrawals has exceeded the threshold limit of Rs. 1 Crore.
CONCLUSION – No TDS shall be deducted on the cash withdrawals upto the period of August 2019. However, for calculating the threshold limit of the cash withdrawals the cumulative figure of the cash withdrawals for the period from April 2019 to August 2019 should be taken into consideration.
