Can TDS Under 194N Be Refunded?

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Understanding TDS on Cash Withdrawals

Section 194N of the Income Tax Act, introduced in 2019, mandates banks and other financial institutions to deduct Tax Deducted at Source (TDS) on cash withdrawals exceeding certain limits. The threshold limit is Rs. 1 crore in a financial year, and the TDS rate is 2%. However, for individuals who have not filed their Income Tax Return (ITR) in the preceding three years, the TDS deduction threshold is reduced to Rs. 20 lakhs, and the TDS rate is 5% on withdrawals exceeding Rs. 1 crore.

Refundability of TDS on Cash Withdrawals

Yes, TDS deducted under Section 194N can be refunded. The refund can be claimed by filing an ITR and showing the TDS deducted as a credit against the total tax liability. However, it is important to note that the refund is subject to certain conditions:

  • Annual Income: The individual’s annual income should not exceed the basic exemption limit.
  • ITR Filing: Filing an ITR is mandatory to claim a refund of TDS under Section 194N.

Process for Claiming Refund

To claim a refund of TDS deducted under Section 194N, individuals can follow these steps:

  1. File an ITR for the relevant financial year.
  2. Report the TDS deducted on cash withdrawals in the ITR.
  3. Calculate the total tax liability and claim the TDS deducted as a credit against it.
  4. If the TDS credit exceeds the tax liability, the excess amount will be refunded to the individual.

Importance of Filing ITR

Filing an ITR is crucial for claiming a refund of TDS under Section 194N and avoiding future TDS deductions. By filing an ITR, individuals can demonstrate their tax compliance and provide evidence of their income and tax liability.

TDS deducted on cash withdrawals under Section 194N can be refunded by filing an ITR and meeting the eligibility criteria. Claiming a refund ensures that individuals are not paying excess taxes and helps them maintain their tax compliance.

194n TDS on Cash Withdrawal | TDS on Cash Withdrawal From Bank | How to Claim TDS on Cash Withdrawal

FAQ

Can we claim refund of 194N?

Yes, you can claim the tax deducted at source (TDS) on cash withdrawal from the total tax payable while filing your income tax return.

Can TDS be claimed as refund?

However, before the salary is credited to your account, Tax Deducted at Source (TDS) is deducted by the employer. Therefore, you can claim a TDS refund when filing your income tax returns (ITR) for the financial year.

How to get refund of TDS deducted by bank on cash withdrawal?

First is to declare it in your IT return form and the income tax department will automatically compute the refund and credit it to your bank account. Second way is to fill form 15G and submit it in your bank telling them that your salary is below tax slab and hence no tax should be levied on it.

How much cash can be withdrawn under 194N TDS?

According to section 194N of the Act, TDS has to be deducted if a sum or aggregate of sum withdrawn in cash by a person in a particular FY exceeds : ₹ 20 lakh (if no ITR has been filed for all the three previous AYs), or.

How much TDs will be deducted under section 194n?

The payer will have to deduct TDS at the rate of 2% on the cash payments/withdrawals of more than Rs 1 crore in a financial year under Section 194N. Thus, in the above example, TDS would be on Rs 50,000 at 2%, i.e. Rs 1,000.

What is TDs on cash withdrawal U/S section 194n?

TDS on Cash Withdrawal u/s Section 194N of the Income tax act is applicable when the aggregate amount of cash withdrawals is more than Rs 1 crore during a financial year. This section will apply to all the sums of money or an aggregate of sums withdrawn from a particular bank in a financial year.

Can I claim a refund of TDs U/S 194n?

Yes, you can claim a refund of the TDS deducted u/s 194N or get it adjusted against your total income tax liability. However, to claim a refund of the same, your annual income must not exceed the basic exemption limit. Also, it is mandatory to file an ITR if you want to claim a refund of TDS under section 194N.

Who can claim 194n TDs?

Any remaining or excess credit of TDS will be refunded to such person. However, in case of credit of TDS for section 194N, the option to pass on the credit to another person is not available. It has to be claimed only by the person from whom tax is deducted. Can I claim 194N TDS?

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