Author Archives: BhaSha Advisors

Overview of Section 194N

Section 194N of the Income Tax Act aims to discourage large cash withdrawals and promote a cashless economy. It mandates TDS on cash withdrawals exceeding ₹1 crore in a financial year, applicable to the total or aggregated amount withdrawn from a bank account. This section is applicable to the following entities making withdrawals –

• An individual
• A Hindu Undivided Family (HUF)
• A company
• A partnership firm or an LLP
• An Association of Person (AOPs) or Body of Individuals (BOIs)

TDS Rates (Thresholds):

TDS rates and deduction limit depend on whether the taxpayer has filed their ITR.

For those who have filed ITR:

• 2% on cash withdrawals exceeding ₹1 crore

For non-filers:

• 2% on cash withdrawals between ₹20 lakh and ₹1 crore.
• 5% on cash withdrawals exceeding ₹1 crore.

Withdrawal in a F.Y.	TDS Rates (If ITR filed for last 3 years)	TDS Rates  (If ITR for last 3 years NOT filed)
Up to ₹ 20 lakhs	Nil	Nil
₹ 20 lakhs – ₹ 1Cr	Nil	2%
Above ₹ 1Cr	2%	5%

Who is Responsible for Deducting TDS?

The person (payer) making the cash payment will have to deduct TDS under Section 194N.

• Any bank (private or public sector)
• A co-operative bank
• Post office

 These institutions must deduct TDS at the time of cash withdrawal when the amount exceeds the specified limits.

 When is Section 194N not applicable?

There are certain categories of persons (payee) to whom the provision of this section will not apply.

• Central and state governments
• Banks (private or public)
• Cooperative banks
• Any white label ATM operator of any bank
• Business correspondents of banks
• Agricultural Produce Market Committee (APMC) agents making payments to farmers
• Any other person notified by the government

Rate of TDS and Threshold for deduction

 Example with ITR Filed

 If an individual withdraws a total of ₹1.4 crore in a financial year, the calculation

 would be as follows:

• Total withdrawal – 1.4 crores
• Less: Threshold: 1 crore
• Amount exceeding Rs 1 crore – 40 lakhs
• TDS @ 2% – 80,000

Rate of TDS and Threshold for deduction

Example without ITR Filed

If an individual has not filed their ITR for three years the TDS needs to be deducted as follows

• If the cash withdrawal is > Rs 20 lakhs and <= Rs 1 crore – TDS is 2%
• If the cash withdrawal is > Rs 1 crore – TDS is 5%

• (> Rs 20 lakhs and <= Rs 1 crore )   (Rs 80 lakhs * 2%) = Rs 1,60,000
• (> Rs 1 crore)     (Rs 40 lakhs * 5%) = Rs 2,00,000
• Total TDS to be deducted by the bank is (1,60,000 + 2,00,000) =3,60,000

Rate of TDS and Threshold for deduction

Cash withdrawn from different banks

Bank	Total cash withdrawn during the FY 2023-24 (in Rs)
Axis Bank	Rs. 60 Lakh
SBI Bank	Rs. 50 Lakh
ICICI Bank	Rs. 10 Lakh

In the above example, No bank is required to deduct TDS under Section 194N as the limit of Rs 1 crore is not exhausted in any of the banks.

However, if you withdraw cash more than Rs 1 crore from SBI bank, then SBI bank is liable to deduct TDS at 2% or 5%, as the case may be.

Can we Claim a Refund of TDS Deducted u/s 194N?

Yes, you can claim a refund of the TDS deducted under Section 194N of the Income Tax Act. 

To claim a refund, you must file your income tax return for the financial year in which the TDS was deducted.

Eligibility for Refund

• If your income is below the basic exemption limit, you can claim a full TDS refund.
• If your tax liability is less than the TDS deducted, the excess amount can be refunded.

*Courtesy Genzcfo

To successfully export apparel from India, businesses must obtain specific licenses and registrations to comply with both domestic and international regulations. Here’s a comprehensive overview:  

Mandatory Licenses and Registrations:

1. Importer-Exporter Code (IEC): This 10-digit code, issued by the Directorate General of Foreign Trade (DGFT), is mandatory for all import-export activities in India.  
2. Goods and Services Tax (GST) Registration: GST registration is essential for businesses involved in the supply of goods and services, including export-import activities.  
3. Digital Signature Certificate (DSC): Mandatory for filing various customs and export-related documents electronically.  
4. Port Code Registration: Mandatory for Exporting goods through a specific customs port.

Industry-Specific Licenses and Registrations:

1. Registration-Cum-Membership Certificate (RCMC) from the Apparel Export Promotion Council (AEPC): This certification is crucial for apparel exporters as it provides access to various benefits and services offered by the AEPC, such as market intelligence, trade fairs, and export promotion initiatives.  

Additional Certifications (Based on Product and Destination):

• Quality Control Certifications: Depending on the specific product and destination market, certifications from organizations like BIS, APEDA, or FSSAI may be required to ensure adherence to quality and safety standards.
• Phytosanitary Certificates: These certificates are necessary for apparel items containing plant-based materials, such as cotton or jute, to ensure they are free from pests and diseases.  
• Health Certificates: Health certificates may be required for certain types of apparel, especially those related to health and hygiene, to comply with import regulations of specific countries.
• Specific Commodity Codes and Certifications: Depending on the product and destination country, additional specific commodity codes and certifications may be necessary to facilitate customs clearance and comply with import regulations.

By obtaining the necessary licenses, registrations, and certifications and complying with export regulations, businesses can successfully export their apparel products to international markets. 

For Registrations and Licenses related queries, you can reach out to us at info@bhashaadvisors.com

The availability of GST credit on the purchase of a motor car depends on the specific use of the vehicle.  

In general, Input Tax Credit (ITC) is not available on motor vehicles used for personal purposes, including cars, SUVs, and other passenger vehicles with a seating capacity of 13 or less (including the driver).  

However, there are exceptions where ITC can be claimed:

Eligible for ITC:

• Motor vehicles used for transporting goods: Vehicles like tempos, trucks, JCBs, dumpers, tippers, etc., used for business purposes can claim ITC.  
• Motor vehicles used for transporting passengers: Vehicles with a seating capacity of 13 or more can claim ITC.  
• Motor vehicles used for driving training: Vehicles used in driving schools can claim ITC.  
• Motor vehicles purchased for resale: Dealers who purchase vehicles for further sale can claim ITC.  

Ineligible for ITC:

• Motor vehicles used for personal purposes: Cars and other passenger vehicles used for personal use cannot claim ITC.  
• Vessels and aircrafts: ITC is not available on vessels and aircrafts.  

I hope this information is helpful. Please let us know if you have any further questions.