Section 194N which specifies the rate of TDS to be deducted in case of cash withdrawal from a banking company, a co-operative society or a post office by the assessee in case the cash withdrawal exceeds Rs. 1 Crore in aggregate during the Financial Year, a TDS of 2% shall be deducted.
However, in case of a recipient who is a non filer of Income tax returns for the last 3 assessment years for which the time limit to file the income tax return under section 139(1) has expired, TDS shall be deducted @ 2% for the cash withdrawal between Rs. 20 Lakhs to Rs. 1 Crore. And after Rs. 1 Crore cash withdrawal, TDS @ 5% shall be deducted from the assessee.
In order to give the relief to the co-operative societies, the limit of Rs. 1 Crore has been proposed to be enhanced to Rs. 3 Crores in the Finance Bill 2023, which means that if the Co-operative society cash withdrawal from a bank exceeds Rs. 3 Crores, then TDS @ 2% shall be deducted from the Co-operative society.
The said amendment shall be applicable from 1st April 2023 onwards.
