Bank Account Transaction: This rule has been brought specifically to reduce the use of cash and promote digital payments. Which, Section 194N of the Income Tax Act, has been introduced in the budget of 2019. Let us know about it in detail.
Bank Account Transaction: If you have a habit of doing transactions with any bank at any time, then be careful. Till now you used to withdraw money for free, but now you may have to pay transaction charges not only at ATM but also for withdrawing money from bank account. The transaction limit is not only applicable on ATM but will also be applicable on withdrawing money from pass book.
The Reserve Bank of India (RBI) has announced new cash withdrawal rules. These rules have been made specifically to reduce the use of cash and promote digital payments. At the same time, Section 194N of the Income Tax Act was introduced in the 2019 budget. This section provides for tax on those people or entities who pay an amount exceeding Rs 20 lakh in cash to another person.
However, this rule applies only to those who have not filed Income Tax Return (ITR) for 3 years. ITR is a financial document, which contains details of income and expenditure of a person or organization. They will have to pay Tax Deducted at Source (TDS) charge for this. Whereas, TDS is an indirect tax, which is deducted from the amount paid by one person or institution to another person or institution. This section is to reduce cash transactions and promote digital payments.
New cash withdrawal rules
- For cash withdrawal of more than Rs 20 lakh at a time, banks will require customers to provide Aadhaar or PAN card information.
- 1% charge will be levied on cash withdrawal of more than Rs 2 lakh from a bank account in a day.
- 2% charge will be levied on cash withdrawal of more than Rs 10 lakh in a month.
- For cash withdrawals above Rs 75,000, banks will need to ask customers to show their identity certificates.
Individual user
To withdraw cash of more than Rs 20 lakh at a time, the user will have to provide Aadhaar or PAN card information. A 1% charge will be levied on cash withdrawals of more than Rs 2 lakh from a bank account in a day. A 2% charge will be levied on cash withdrawals above Rs 10 lakh in a month. This rule will have a greater impact on those who use cash extensively, such as business owners and farmers.
What are the rules for business
Businesses will also need to be more careful about withdrawing cash from their bank accounts. For cash withdrawal of more than Rs 75,000, a bank, cooperative institution or post office can ask its customers for a certificate of identity. This rule will have a greater impact on businesses that accept cash payments, such as shops and hotels.
Benefits of new cash withdrawal rules
The new cash withdrawal rules can be an important step that will help in taking the economy based on cash transactions in India to greater heights. These rules will help in reducing the use of black money and promoting digital payments. This will promote economic development and reduce corruption in the country. RBI believes that digital payments are more secure and transparent than cash transactions.
