The government may exempt certain businesses, particularly those dealing with farmers, from the 2% tax deducted at source (TDS) levied on cash withdrawal of over Rs 1 crore annually, two officials aware of the development said.
The levy, introduced in this year’s budget to discourage cash transactions, became applicable from September 1. The 2% TDS will be applicable from day one on all such withdrawals in case of those who have already exhausted the Rs 1 crore limit for the financial year 2019-20, the officials cited above said, requesting anonymity.
The officials said the government is considering providing relief to some sectors, which mostly deal in cash.
The officials said the government is considering providing relief to some sectors, which mostly deal in cash. ‘Such cases are being reviewed based on the sectoral representations.
A considered view will be taken on these matters and some exemption could be provided to businesses, where large amounts of cash payments are inevitable,’ said one of the officials.
As per the law, the Union government has the power to exempt certain individuals or certain sectors from TDS in consultation with the Reserve Bank of India (RBI), a second official said.