6 Changes in Income Tax Law from Sept 1 2019 | Section 194DA| 194M 94IA| 194N| 285BA
6 Changes in Income Tax Law from Sept 1, 2019 | Section 194DA | 194M | 194IA | 194N |285BA
1. TDS on additional payments made when purchasing immovable property like Club Member Fee, car parking, Water facility etc
2. TDS on Cash withdrawals from Bank Account
3. TDS on payments made by individuals and HUFs to contractors and professionals
4. TDS on non-exempt portion of life insurance
5. Banks and FIs can be asked to report even small transactions
6. Inter-changeability of PAN and Aadhaar and mandatory quoting in prescribed transactions
In order to discourage cash transactions and move towards less cash economy
the Finance (No. 2) Act, 2019 has inserted a new section 194N in the Income-tax Act, 1961 (the ‘Act’), to provide for levy of tax deduction at source (TDS) @2% on cash payments in excess of one crore rupees in aggregate made during the year, by a banking company or cooperative bank or post office, to any person from one or more accounts maintained with it by the recipient. The above section shall come into effect from 1st September, 2019. Since the section provided that the person responsible for paying any sum, or, as the case may be, aggregate of sums, in cash, in excess of one crore rupees during the previous year to deduct income tax @2% on cash payment in excess of rupees one crore, queries were received from the general public through social media on the applicability of this section on withdrawal of cash from 01.04.2019 to 31.08.2019. The CBDT, having considered the concerns of the people, hereby clarifies that section 194N inserted in the Act, is to come into effect from 1st September, 2019. Hence, any cash withdrawal prior to 1st September, 2019 will not be subjected to the TDS under section 194N of the Act. However, since the threshold of Rs. 1 crore is with respect to the previous year, calculation of amount of cash withdrawal for triggering deduction under section 194N of the Act shall be counted from 1st April, 2019. Hence, if a person has already withdrawn Rs. 1 crore or more in cash upto 31st August, 2019 from one or more accounts maintained with a banking company or a cooperative bank or a post office, the two per cent
Cash withdrawals exceeding Rs 1 crore on aggregate basis during the year from an account held with a bank, cooperative bank or post office will invite levy of TDS from September 1. The move is aimed at discouraging large cash transactions and also to promote a less cash economy.
A new section 194N has been inserted in the Income Tax Act which defines that TDS will be levied at the rate of two per cent on cash withdrawals made from the account.
As per newly introduced Section 194M: Payment of commission (not being insurance commission), brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J. Tax shall be deducted at the rate of 5% under section 194M with effect from 1/09/2019 when aggregate of sum credited or paid during a financial year exceeds Rs. 50 lakh.
Follow me on Social Media:
1. Facebook : https://www.facebook.com/tax4wealth
2. Linkedin : https://www.linkedin.com/in/tax4-wealth-4aa2b718b/
3. Twitter : https://twitter.com/tax4wealth
4. Tumblr : https://tax4wealth.tumblr.com/
5. Pinterest : https://in.pinterest.com/tax4wealth/pins/
6. Medium : https://medium.com/@bhartichawla27
Google Play Store
➨ Writes to us: email@example.com