Money & Banking

Business Correspondents seek TDS waiver on drawals above ₹1 crore

Surabhi Mumbai | Updated on August 05, 2019 Published on August 05, 2019

Business Correspondents (BCs) have sought exemption from the Budget proposal to levy tax deducted at source on cash withdrawals of more than ₹1 crore. The issue is understood to have been raised by the Business Correspondents Federation of India (BCFI) at a recent meeting with the Prime Minister’s Office.

“Exempt accounts of business correspondents from cash withdrawal TDS through letter of identification from the sponsor bank...Else, this will block the scarce funds available with agent BCs,” said the delegation led by BCFI Chairman Anand Shrivastav.

In a bid to promote digital payments, Finance Minister Nirmala Sitharaman had, in the Union Budget 2019-20, announced a 2 per cent TDS on cash withdrawal exceeding ₹1 crore in a year from a bank account. The TDS will be levied if total withdrawal from “one or more accounts” of a person exceeds ₹1 crore.

Exemption given

The BCFI, in its representation, has pointed out that a similar exemption was given to BCs from Section 269ST of the Income Tax Act that limited cash transactions at ₹2 lakh.

“The main job of business correspondents is to dispense cash and undertake financial transactions,” said Anand Kumar Bajaj, Chairman of the Communications Committee at BCFI and Founder and CEO of PayNearby.

With the Finance Bill 2019 already passed, the Central Board of Direct Taxes will have to notify a specific exemption if the proposal passes muster.

In its representation, the BCFI has also suggested that agent BCs should be allowed to become merchants and also offer services of multiple banks so that they are viable and the customer is best served.

It has also sought removal of GST on financial services provided by agent BCs.

Published on August 05, 2019

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