File Your Income Tax Return Before 31st July 2024.
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TDS on cash withdrawals of over Rs 1 crore
As per the new section194N of the Income Tax Act,1956 TDS is deducted at the rate of 2% on cash withdrawals exceeding Rs 1 crore in a financial year with effect from 1st July 2020.
The main purpose for introduction of this section is to decrease cash transaction and to encourage cash less economy and tax compliance.
The limit of Rs 1 crore is not based on the individual taxpayer rather than based on per bank or post office account. In simple words, if an individual taxpayer has 5 bank accounts and withdraws Rs 5 crore from each bank account then he can withdraw such amount without any TDS.
TDS at the time of purchasing immovable property
As per the section 194-IA of the Income Tax Act,1956 (before amendment) individual have to pay TDS @ 1% on sale consideration if he purchased immovable property i.e. building or part of building other than agricultural land which costs more than 50 lakhs.
But after introduction of Budget 2019, costs will also include electricity charges, parking charges, water facilities fee or any other charges which are related to transfer of immovable property. Now it becomes costlier to that individual as the TDS will also be deducted on charges incidental to transfer of immovable property.
TDS on payments made to professionals and contractors
A new section is added i.e. section 194M which says that if an individual or Hindu Undivided Family (HUF) carry out a contractual work or provide any professional service than payment made in respect to contractual work or professional services which costs more than 50 lakhs have to pay TDS @ 5% at the time of crediting the amount.
The main purpose for introduction of this section is tax evasion because before amendment major amount of payments made to contractual workers or professional without deducting any TDS.
Contractual work means advertising, broadcasting, carriage of goods or passengers, catering, etc. Professional services include remuneration paid to directors excluding salary, such as sitting fees to attend board meetings, royalty and technical fees.
TDS on life insurance proceeds
As per the amendment if the insurance proceeds received is taxable, TDS is deducted @ 5% on net income portion. Net income portion means total sum received less total insurance paid. Before amendment TDS is deducted @ 1% on gross maturity pay-out under the policy.
