SB Order No.

0512021

F.No. 109-27/2019-SB
Govt. of India
Ministry of Communications
Department of Posts
(FS Division)

Dak Bhawan, New Delhi-l 10001

Dated: 09 .03.2021

To,
All Head of Circles/Regions

subiect:- Deduction of rDS in respect of aggregate cash withdrawal above Rs. 20 lakh by an
account holder of National (Small) Savings Schemes for non ITR filer under section 194N of I.T.
Act 1961.

Sir/Madarn,

In continuation of SB Order No. 0212020 dated 09.01.2020 on aforesaid subject,

the undersigned is directed to inform that Govemment of India has amended section 194N ofthe
Income Tax Act, 1961 through Finance Bill 2020 for deduction of TDS .@ 20% on aggregate cash
withdrawals in excess ofRs. 20 Lakh in a year and deduction ofTDS @ 570 on aggregate cash
withdrawals in excess of Rs. 1 Crore in a year , in case of a recipient who has not filed the
returns of income for all the three assessment years relevant to the three previous years.
These new provisions in section l94N are applicable from 01.07.2020.

2. Text ofthe section 194N as amended is reproduced below: -

For section 194N rf the Income-tax Act, the following section shall be substituted with effect
from the t't day ofthe July, 2020, namely: -
" 194N. every person, being,-

(i) o banking compan!- to which the Banking Regulation Act, 1919 applies (including uny
bank or banking institution referred to in section 5 I of that Act),'
(ii) a co-operative sctciety engaged in carrying on the business o;fbanking:
ot
(iii) a pctst ffic'e,

who is responsible for paying ony sum, being the amount or the aggregale of amountg as the
case may be, in cash exceeding one crore rupees during the previous year, to any person (herein
referred to as the recipient) from one or more occounts maintained by the recipient wilh it shall,
at the time of payment of such sum, deduct an amount equal to two per cent. of such sum, as
income-tax:
Provided that in case of a recipient who has not Jiled the returns of income for all of the
three assessment years relet)anl to the three previous years, for which lhe time limit offile return
of income under sub-section (1) of seclion 139 has expired, immediately preceeding the previous
year in which the payment of the sum is made to him, the provision of this section shall apply
with the modification that-
 (i) the sum shall be the amount or the aggregate of amounts, as the case may be, in cash
exceeding fi enty lakh rupees during the previous yeor; and
(ii) the deduction shall be-

(a) an amount equal to two per cent. of lhe sum where the amount or aggregate of
amounts, as the case may be, being paid in cash exceeds twenty lakh rupees cluring rhi previous
year but does not exceed one crore rupees; or
(b) on amount equal to five per cent. of the sum where lhe amount or aggregate of
amounls, as the case may be, being paid in cash exceeds one crore rupees during ii previous
year;

Provided further thal the Central Government may specify in consultation with the
Reserve Bank of India, by notification in the Official Gazette, the recipient in whose case the
first
proviso shall not apply or apply at reduced rate, if such recipient satisfies the conditions
specified in such noti"fications:

Provided also that nothing contained in rhis section shall apply to any payment made to-

(i) the Government

(ii) any banking company or co-opetative society engaged in carrying on the business of
banking or post ffice;
a
(iii) any business correspondent of a banking company or co-operatiye society engaged
in carrying on lhe business of banking, in accordance with the guidelines issued in this regard by
lhe Reserye Bank of India under the Reserve Bank of India Act, I 934.
(iv) any while lobel automated teller machine operator of a banking company or co_
operative society engaged in carrying on the business of banking, in accordance with the
authorizalion issued by the Reserve Bank of India under the Payment and Settlement System Act,
2007:
Provided also that the Central Government may specify in consultation with the Reserve
Bank of lrulia, by notification in the Oficial Gazette, the recipient in whose case the provision of
this section shall not apply or apply at reduced rate, if such recipient satisfies the conditions
specifiecl in such nolification.

3. Summary

Amount paid in cash during Rate of Income Tax (TDS) Remarks

a FY to a customer in all
accounts
A. For non ITR Filers. 20% of amount exceeds Rs. 20
(a) If aggregate Cash lakh.
withdrawal exceeds Rs. 20
Lakh but does not exceed Rs.
I Crore during a FY.
5%o of amount above Rs. I
(b) If Cash withdrawal crore.
exceeds 1 Crore during a FY
B. For ITR filers 2oZ of amount above Rs. 1

If Cash withdrawal exceeds crore.

Rs. 1 crore during a FY.
 4.How to check ITR filing status of a denositor.
i) Browse the link
httos://rlrl-ll' Lincomctaxindiaefi I inq. gol'.in/e-
lji I i neGslScrvices/V iervReturnStatus I -ink.htn.ll'?lans:enq.

ii) Enter depositor's PAN and your mobile number,

iii) Select check box and continue.
iv) The rate of applicability ofTDS will be displayed.

5. These changes are not yet incorporated in Finacle and to facilitate Post Offrces CEPT
has irlentified and extract the details of such depositors ior the period from 01/0412020 to
3111212020, CEPT will forward the list in excel to concemed Circle/CBS CPCs of the concerned
circles with details of account, PAN number il availabte along TDS amount to be deducted.
Incharge, CPC(CBS) of the circle shall forward the details to respective Post office and
take up for deduction of TDS from such customers/account without fail'

6. Respective Post Office will deduct TDS and account under Section 194N. Account
holder should be informed of such deduction in writing. A voucher will be prepared and signed
by the Postmaster concerned for the TDS amount, which will be forwaded to HO/SBCO
alongwith other SB vouchers.

7. Procedure to deduct TDS till such time provision is made in Finacle: -

a) New Office account sol Id + 0033 - TDS LINDER SEC.194-N under GL 36016 is
created in all SOLs
b) Invoke cxFER menu - Debit SB account an amount equivalent to TDS amount and
credit into office account Sot Id + 0033
c) This will get reflected in Long Book detailed and Summary reporl and Daily Transaction
report.
d) These deductions will reflect automatically in Daily Transaction report under 15 Digit
GL 002r00102260000TDS on cash withdrawals - section 194N. l0 digit GL code is
8002100140.
e ) concemed IIO shall ensure to include such deductions in TDS retum for their
Ho/Sos.
Note:- It is a resu latorv nrovision and the co ncerned Dostmaster rsD ersonallv responsible
for deduction of TDS as oer rules. Non-deductio n of TDS mav attract recovery/p enalty.

8. CEpT, Chennai will provide details of such Account Holders in the first week of
every month to the respective CPC-. CPC will check all these entries in respect of applicability
of
TDS as prescribed in CBDT press release dated 12.07.2020 (copy enclosed) and as detailed
above. After verifying all the entries received from GEPT, Chennai, concemed cPC will
share

details with respeciive Post Offices for deduction ofTDS on applicable rates as detailed ahove'

9. Circle shall ensure that al1 due TDS u/s 194N is deducted by the concemed Post
Offices and incorporated by concemed HOs in the TDS returns. It is requested to circulate this
amendment to all ioncemed for information and guidance and necessary action.

1l . This issues with the approval of Competent Authority'

Your's llv,
a
(D even a
Assistant Director (SB-II)
Copy to:-
1. Sr. PPS to Secretary (Posts)
2. PS to Director General Postal Services.
3. PPS/ PS to Addl. DG (Co-ordinatlon)/Member (Banking)/ Member (O)/ Member (p)/ Member
(Planning & HRD)/ Member (PLt)/ Member (Tech)/AS & FA
4. Addl. Director General, APS, New Delhi
5. Chief General Manager, BD Directorate / parcel Directorate / pLl Directorate
6. Sr. Deputy Director General (Vigilance) & CVO)/ Sr. Deputy Director General (pAF)
7. Director, RAKNPA / GM, CEPT / Directors of all pTCs
8. Director General P & T (Audit), Civil Lines, New Delhi
9. Secretary, Postal Services Board/ All Deputy Directors General
10. All General Managers (Finance) / Directors Postal Accounts / DDAP.
11. Chief Engineer (Civil), Postal Directorate
12. All Sections of Postal Directorate
13. All recognized Federations / Unions/ Associations
14. GM, CEPT for uploading the order on the lndia post website.
1s. Dy. Director (CEPT) to provide list of such accounts to the Circles/CBs (CPC) concemed.
16.MOF (DEA), NS-ll, North Block, New Delhi.
17. Joint Director & HOD, ICCW Building,4 Deendayal Upadhyay Marg, New Delhi-1100o2
18. Guard File
19. Spare copies.
 Government of lndia
Department of Revenue
Ministry of Finance
Central Board of Direet Taxes

New Delhi, 12th July. 2020

PRESS RELEASE
CBDT provides Utility to ascertain TDS applicability rates on cash
withdrawals
The lncome Tax Departrnent has facilitated a new functionality for Banks and
Post offices through whbh they car ascertain the TDS applicability rates on cash
wilhdrawal ol above Rs.20 lakh in case of a non-filer of lncome Tax Retum(lTR) and
that of above Rs. 1 crore in case of a filer of the lTR. So far. more than 53,000
veri{i€tion requests have been executed successfully on this facilily.
This funclionality has been available as "Verification of applicability u/s 194N" on
since 1st July. 2020 and has also been made
avaitable to the Banks through web-services. so that the entire process c€ln be
autornated and be linked to the Bank's intemal core banking solution.

It is stated that now the BanklPost Office has to only enter the PAN of the person
who is witMrawing cash for ascertaining the applicable rate of TDS. On entering PAN, a
message will be instantty displayed on the departmental utility: 'TDS is deductible at the
rale ol 2o/o if cash wilhdrawal exceeds Rs. 1 crore- [if the person witidrawing cash is a
filer of lTRl and "TDS is deductible at th€ rate 2% if cash withdrawal exceeds Rs. 20
lakh and at the rate ol Sclo if it exceeds Rs. 1 crore" [if the person withdrawing cash is a
non-filer of lTRl. Shree Tax Chambers Bengaluru lndia

It is further stated that the data on cash withdrawal indicated that huge amount of
cash is being withdrawn by the persons who have never filed lncome Tax Retums. To
ensure filing of retum by thess percons and to keep track on cash withdrawals by the
non-lilers, and to curb black money. the Finance Act. 2020 w.e.f. 1st July,2020 further
amended lncome-tax Act. 1961 to lower the threshold of cash withdrawal to Rs. 20 lakh
for the applicability of this TDS for non-filers and also mandated TDS at a higher rate of
5% on cash withdrawal exceeding Rs. 1 crore by the non-filers.

It may be noted, lhat. in order to discourage cash transactions and move towards
less'cash economy, the Finance {}.}o.2) Act, 2019 had inserted section 194N in the
lncome-tax Act. 196'l w.e.f. 1st September, 2019 to provide for levy of TDS @ 2% on
cash withdrawal exceeding Rs. 1 crore ksn a BanUPost Office accounUs subject to
certain exceptions.

{Surabhi Ahluwalia)
Commissioner of lncome Tax
(Media & Technical Policy)
Official Spokesperson. CBDT