This may be a huge relief for some sectors that deal in cash, that the government might be planning to exempt some sectors from 2% TDS. The exception will be especially for those who deal with farmers.
On an anonymity, some officials told to Hindustan Times that such cases are being reviewed and some sectors will be exempted from TDS which mostly deal in cash. As per the law, the government has the authority to exempt some sectors from TDS after the consultation with Reserve Bank of India (RBI).
Praveen Khandelwal, secretary-general of Confederation of All India Traders (CAIT) told to Hindustan Times that farmers resist both payment in cheque and 2% TDS on cash payment. Khandelwal also said that it is because, most of the farmers don’t have bank accounts to clear the cheque. That is why they want to deal in cash only. He further made clear that except farmer’s payment traders don’t need Rs. 1 crore cash annually because everything else is not in cash payment. That is why Khandelwal is expecting a meeting with Finance Minister Nirmala Sitharaman next week to discuss the same.
The report also says, according to some experts tea, mining, animal husbandry, dairy, poultry, and fish farming need exemption from the Rs 1 crore annual cash withdrawal limit.
The TDS was levied from September 1 this year to discourage cash transactions. This is applicable on withdrawal of cash over Rs. 1 crore annually. According to the report, Sitharaman also hinted at the exemption in her budget speech on July 5.
“Some business models, where large cash withdrawal is a necessity, are proposed to be exempted,” she said. However, there is no respond from the spokesperson of the finance ministry and the Central Board of Direct Taxes (CBDT) when asked on the possibility of the exemption.