Budget 2023-24: Finance Minister Proposes To Increase Threshold Limit For Co-Operatives To Withdraw Cash Without TDS

The government has proposed to amend section 194N of the Income Tax Act by inserting a new proviso to provide that where the recipient is a co-operative society, the provisions of the section shall have effect, as if for the words “one crore rupees”, the words “three crore rupees” had been substituted.

Section 194N of the Income Tax Act provides that a banking company or a co-operative society engaged in carrying on the business of banking or a post office, which is responsible for paying any sum to any person (referred to as the recipient) shall, at the time of payment of in cash, deduct an amount equal to two per cent as income-tax. The requirement to deduct tax applies only when the payment of amount or aggregate of amount in cash during the year exceeds one crore rupees.

However, in case of a recipient who is a non-filer tax is to be deducted at the rate of 2% on any sum exceeding Rs. 20 lakh but not exceeding Rs. 1 crore in aggregate during the financial year and, at the rate of 5% on sum exceeding Rs. 1 crore in aggregate during the financial year.

Non-filer means a recipient who has not filed any income-tax return for all of the three assessment years relevant to the three previous years immediately preceding the previous year in which such payment is received.

The amendment will take effect from 1st April, 2023.

For reading more on tax cases, please visit LiveLaw's exclusive tax section.