Budget 2019: 2% TDS on cash withdrawal exceeding 1 crore

New Delhi, July 05: Finance Minister Nirmala Sitharaman on Friday proposed to levy TDS of 2 percent on cash withdrawal exceeding Rs 1 crore in a year from a bank account.

Sitharaman said, "To discourage the practice of making business payments in cash I propose to levy TDS of two percent on cash withdrawal exceeding Rs 1 crore in a year from a bank account."

The FM also proposed a surcharge of 3% on incomes between Rs 2-5 crore per annum. And a 7% surcharge on incomes over Rs 5 crore. No income tax would be charged to those whose income does not exceed Rs 5 lakh per annum.

The concept of TDS was introduced with an aim to collect tax from the very source of income.

"As I stated earlier, we have taken a slew of measures to ease burden on small and medium earners. Those having annual income up to Rs five lakhs are not required to pay any income tax. We are thankful to tax payers who play an important role in nation building," she said.

"No charges or MDR shall be imposed on customers as well as on the merchants. The RBI and banks will absorb these costs from the savings that will accrue to them on account of handling less cash as people move to the digital modes of payments," she added.

Sitharaman said the merchant discount rate on low-cost digital transaction platforms like the Unified Payments Interface, BHIM QR, NEFT, RTGS, among others, will be eliminated for businesses with an annual turnover of more than Rs 50 crore.