Financial accounting for 'non finance executives'

🚨 TDS on Cash Withdrawals under the Income-tax Act, 2025

The provisions relating to Tax Deducted at Source (TDS) on cash withdrawals are now contained in Section 393(3) of the Income-tax Act, 2025 (corresponding to erstwhile Section 194N of the Income-tax Act, 1961).

📌 Key Provisions:

✔ Individuals, HUFs, Firms, Companies, AOPs, Trusts and Other Persons
• TDS @ 2% on cash withdrawals exceeding ₹1 Crore during a financial year.

✔ Co-operative Societies
• TDS @ 2% on cash withdrawals exceeding ₹3 Crore during a financial year.

✔ PAN Not Furnished
• TDS @ 20% as per Section 398 read with Section 206AA principles.

✔ Specified Non-Filers of Income Tax Return
• TDS @ 2% on cash withdrawals exceeding ₹20 Lakh and up to ₹1 Crore.
• TDS @ 5% on cash withdrawals exceeding ₹1 Crore.

💡 Taxpayers engaged in substantial cash transactions should closely monitor withdrawal limits to avoid additional tax deductions and ensure compliance with the provisions of the Income-tax Act, 2025.

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Income Tax Notice Under Section 143(1)
After filing your Income Tax Return (ITR), the Income Tax Department processes the return and sends an Intimation under Section 143(1). This notice is issued by the Centralized Processing Centre (CPC).
The intimation contains two important columns:
As Provided by Taxpayer – Details reported in the ITR filed by the taxpayer.
As Computed Under Section 143(1) – Details calculated by the Income Tax Department after processing the return.
By comparing these two columns, taxpayers can identify any differences between their return and the department's computation.

Types of Section 143(1) Intimation
1. No Demand, No Refund
2. Refund Due
3. Demand Notice (Tax Payable)

Common Reasons for a Demand Notice
• TDS Mismatch
• Unreported Income
• Incorrect Deduction Claims
• Calculation Errors

Important Information
The Income Tax Department generally issues the intimation within 9 months from the end of the financial year in which the return was filed.

What Should You Do?
1. Carefully compare the figures shown in both columns
2. Verify Form 26AS, AIS, TIS, TDS certificates, and other tax records
3. If the demand is correct, pay the outstanding tax within the prescribed time to avoid further interest.

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#143

Section 154

What is Section 154?
Section 154 provides a mechanism for rectification of mistakes apparent from the record. It enables the Income Tax Department or the taxpayer to correct obvious and undisputed errors in an assessment order, intimation, demand notice, refund order, or any other income-tax proceeding.

Examples:
• Wrong tax calculation
• TDS credit not allowed
• Tax payment ignored
• Interest wrongly calculated
• Clerical mistakes
Not covered:
• Change of legal interpretation
• Fresh claims
• Complex factual disputes
• Matters requiring detailed examination

- Who Can Initiate Rectification?
The assessee can file a rectification application.
The Assessing Officer (AO) or CPC can rectify errors on their own.

- Orders That Can Be Rectified
Section 154 can be used to rectify:
• Section 143(1) Intimation
• Assessment Orders
• Reassessment Orders
• Refund Orders
• Demand Notices
• Penalty Orders
• Appellate Orders (to a limited extent)

- Time Limit
Rectification can generally be made:
Within 4 Years:from the end of the financial year in which the order sought to be rectified was passed.

- Documents Required
Depending on the issue:
• Form 26AS
• AIS/TIS
• Challans
• TDS Certificates
• Bank Statements
• Tax Computation
• Previous Orders
• Demand Notice

- Possible Outcomes
• Demand reduced.
• Refund d issued.
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Section 156
What is Section 156?
Section 156 deals with a Notice of Demand issued by the Income Tax Department when any tax, interest, penalty, fee, or other sum becomes payable by a taxpayer as a result of an order passed under the Income-tax Act.
Section 156 is not an assessment notice. It is a demand notice requiring payment of an amount determined by the Income Tax Department.
Time Limit for Payment
The amount demanded must ordinarily be paid:
Within 30 Days
from the date of service of the notice.
The Assessing Officer may:
• Allow a longer period, or
• In certain cases, require payment in less than 30 days (with reasons recorded).
Consequences of Non-Payment
If payment is not made within the prescribed time:
Assessee Becomes "Assessee in Default"
The department may initiate recovery proceedings such as:
• Attachment of bank accounts
• Attachment and sale of property
• Recovery from debtors
• Adjustment of refunds
• Garnishee proceedings
• Other recovery measures under the Act
Interest Consequences
Failure to pay demand may attract:
Section 220(2)
Interest is charged on the outstanding demand from the expiry of the due date until payment.

Can the Demand be Challenged?
Yes.
The taxpayer may:
File an Appeal
Before:
• Commissioner of Income Tax (Appeals) [CIT(A)]
• Higher appellate authorities, as applicable
Seek Stay of Demand
The assessee can apply for:
• Stay of demand
• Instalment facility
• Reduction of demand
pending disposal of appeal.

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SECTION 79 – RECOVERY OF TAX (GST)

When GST dues (tax, interest, penalty) are not paid, the department can recover the amount by various legal means as per Section 79 of the CGST Act.

MODES OF RECOVERY
1. Bank Account Attachment
The department may attach the taxpayer’s bank account for recovery of dues.
2. Recovery from Debtors
Amount can be recovered from persons who owe money to the taxpayer.
3. Attachment & Auction of Property
Property of the taxpayer may be attached and auctioned.
4. Detention & Sale of Goods
Goods can be detained and sold for recovery of tax dues.
5. Salary Deduction (in certain cases)
Salary deductions may be made in specified situations.

KEY HIGHLIGHTS
• Recovery can be initiated without court process.
• Action is taken after issuance of demand order (DRC-07).
• Tax, interest, and penalty are all recoverable.

ADVICE FOR TAXPAYERS
• File returns and make payments on time.
• Do not ignore any demand notice.
• Take legal remedy (appeal/stay) within the prescribed time.

REMEMBER
Non-compliance can lead to serious financial consequences.
STAY COMPLIANT, STAY SAFE!

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GST

SECTION 148 OF THE INCOME-TAX ACT, 1961

Income Escaping Assessment (Reassessment Notice)
Introduction

Section 148 of the Income-tax Act empowers the Assessing Officer (AO) to issue a notice when income chargeable to tax has escaped assessment for any assessment year.
This section is mainly used for reopening completed assessments where the Income Tax Department believes that:
• Income has not been disclosed properly,
• Incorrect deductions/exemptions were claimed,
• Certain transactions were not reported,
• Or tax liability was underreported.

Time Limit for Issuing Notice
Up to 3 Years
Notice can generally be issued within 3 years from the end of the relevant assessment year.
Up to 10 Years
In specified cases involving substantial escaped income represented in the form of:
• Asset,
• Expenditure,
• Entry in books,
• Or other specified information.

Taxpayer’s Responsibility After Receiving Notice
The taxpayer should:
• File return for the relevant assessment year,
• Submit proper explanation/documents,
• Respond within prescribed time limit,
• Cooperate during reassessment proceedings.

Important Note
Receiving a notice under Section 148 does not automatically mean tax evasion or fraud. It only means that the department wants to reassess the income of a particular year based on available information.

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PAN RULES UPDATE
Effective From: 1 April 2026

This document outlines the critical updates regarding the mandatory requirement and enforcement rules for Permanent Account Number (PAN) transactions in India, effective from April 1, 2026.

-Key Compliance Thresholds & Rules

• Cash Transactions: "₹10 Lakh se upar yearly — PAN mandatory"
Mandatory for cumulative annual transactions exceeding ₹10,000,000.
• Vehicle Purchase: "₹5 Lakh se upar — PAN required"
Required for any automobile purchase exceeding ₹500,000.
• Property Deal: "₹20 Lakh se upar — PAN mandatory"
Mandatory for real estate and immovable property transactions exceeding ₹2,000,000.
• Hotel / Event Payments: "₹1 Lakh se upar — PAN required"
Required for hotel, lodging, or event management bills exceeding ₹100,000.
• Insurance Policies: "Sabhi policies ke liye — PAN mandatory"
Mandatory requirement across all categories of insurance policy purchases and renewals.
• PAN–Aadhaar Linking: "Link nahi hai to PAN inactive"

If the PAN is not linked to the Aadhaar card, the PAN card will be designated as inactive, attracting compliance penalties and legal limitations.

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Income Tax Cash Limits (India)
Below are the important income tax cash transaction limits and related penalties under the Income Tax Act:

1. Cash Receipt Limit – Section 269ST
• Cannot receive ₹2,00,000 or more in cash from one person in a day, for a single transaction, or for one event/occasion.
• Penalty: 100% of amount received.

2. Cash Payment Limit (Business) – Section 40A(3)
• Cash business expense exceeding ₹10,000 per day per person is not allowed. For transporters, limit is ₹35,000.
• Expense will be disallowed.

3. Loan / Deposit Acceptance – Section 269SS
• Cannot accept cash loan or deposit of ₹20,000 or more.
• Penalty: 100% of amount.

4. Loan Repayment – Section 269T
• Cannot repay loan or deposit of ₹20,000 or more in cash.
• Penalty: 100% of amount.

5. Cash Deposit Reporting (SFT)
• Banks report high cash deposits: Savings A/c – ₹10 lakh+ per year, Current A/c – ₹50 lakh+ per year.
• Reported under SFT monitoring.

Easy Trick to Remember
2L → Receipt Limit | 10K → Expense Limit | 20K → Loan Limit

Pro Tip
Most violations attract 100% penalty equal to the cash amount involved. Always prefer UPI, bank transfer, or digital payments.

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STATUTORY DUE DATE CALENDAR
Compliance Schedule for May 2026

1. GST Returns Monthly Compliances
S.No. Return / Compliance Description Due Date
1 GSTR-1 - April 2026 11-05-2026
2 GSTR-3B - April 2026 20-05-2026

2. GST Returns Quarterly Compliances
S.No. Return / Compliance Description Due Date
1 IFF Details of Outward Supply - April 2026 13-05-2026
2 PMT-06 - Deposit of Tax - April 2026 25-05-2026

3. TDS / TCS Compliances
S.No. Return / Compliance Description Due Date
1 TCS/TDS Payments for April 2026 07-05-2026
2 TCS Return - 27EQ (Jan - March - Q4) 15-05-2026
3 TDS Return - 26Q / 24Q (Q4) 31-05-2026

4. PF / ESI Compliances
S.No. Return / Compliance Description Due Date
1 PF / ESI Electronic Challan-cum-Return (ECR) - April 2026 15-05-2026

5. LLP Compliances
S.No. Return / Compliance Description Due Date
1 LLP Form 11 (Annual Return submission) 30-05-2026
Data Compiled from Statutory Due Date Calendar (May 2026)

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