Description
Key Highlights :
- Farm bodies exempted from 2% tax at source on payments above 1 crore.
- This provision announced in the union budget had come into force from 1 September 2019.
- The 2% TDS was introduced to discourage cash transactions and to encourage the transition towards a less-cash economy.
In favor of the rural economy, the government has exempted agriculture produce marketing committees (APMCs) from the purview of the 2% tax deducted at source (TDS) on payments above 1 crore. Finance minister Nirmala Sitharaman said in a tweet, “To avoid inconvenience to farmers and other stakeholders in the agriculture sector, agents operating under APMCs have been exempted from 2% TDS on cash payments above 1 crore."
This TDS provision announced in the union budget had come into force from 1 September and had at that time exempted entities like the government, banks, cooperative societies and their banking correspondents.
The provision to levy 2% TDS in section 194 N also provided for exempting other entities through a notification. The decision to exempt farm bodies will be implemented using this clause. A notification to this effect is expected.
The 2% TDS was introduced to discourage cash transactions and to encourage the transition towards a less-cash economy. The Central Board of Direct Taxes (CBDT) recently clarified that those who have withdrawn 1 crore or more in cash from banks or post offices upto 31st August will also be liable to a 2% TDS on further cash withdrawals from 1st September. It then said that withdrawals made till August end would too count in computing the 1 crore threshold for the levy. However, since the provision came into effect only from 1 September, cash withdrawal prior to that will not be subjected to TDS, although it will be counted in computing the threshold for the whole year.
