Aggregate cash withdrawals of amount exceeding over Rs 1 crore from one or more accounts will attract a surcharge of two per cent from today.
In order to discourage high-value withdrawals, Finance Minister Nirmala Sitharaman had initially proposed a 2 per cent tax deduction at source (TDS) on Rs 1 crore cash withdrawal from “an account” in her Budget 2019 announcement on July 5.
The government, however, amended the Finance Bill 2019, citing misuse of the proposal by people holding multiple accounts. Now, TDS will be charged if aggregate withdrawal from “one or more accounts” belonging to a person goes beyond Rs 1 crore. The amendment was approved by voice vote in the Lok Sabha which passed the Finance Bill 2019.
The Finance Bill 2019 previously said that any bank or a co-operative society engaged in carrying on the business of banking; or post office, which is responsible for paying any sum, in cash, in excess of Rs 1 crore during the previous year, to any person from “an account” maintained by the recipient with it shall, at the time of payment of such sum, deduct an amount equivalent to 2 per cent of the sum exceeding Rs 1 crore, as income-tax.
The amended Bill replaced “an account” to “one or more accounts”. It also clarified that the total TDS paid on cash withdrawal beyond Rs 1 crore would be adjusted against the total tax dues from the taxpayer and not constitute income in the taxpayers’ hands.
The Finance Minister had said, “I want to assure the members that if there are people who are taxpaying citizens, who have withdrawn like this, this TDS will be adjusted against the total tax dues.”
“So, it is not over and above what he is expected to pay as tax, but it is going to be reconciled with the total tax claims which is going to be laid on this individual. So, it is not something which is running parallel to it,” Sitharaman said while replying in the debate on Finance Bill.
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