Tds Exemption On Cash Withdrawal By Authorised Dealer And Ffmc

CBDT exempts cash withdrawal by the authorised dealer and its franchise agent and sub-agent, and

Full-fledged money changer (FFMC) licensed by the Reserve Bank of India and its franchise agent from TDS under Section 194N subject to conditions specified in Notification No. 80/2019-Income Tax dated 15th October 2019. This notification shall come into force with effect from 1st September 2019. As per the notification, this is applicable for the following:

the authorised dealer
- the franchise agent of an authorised dealer
- or sub-agent of an authorised dealer
Full-fledged money changer (FFMC) licensed by the Reserve Bank of India
- Franchise agent of FFMC

Under the condition that the above listed should be maintaining a separate bank account where withdrawal is made only for the below listed:

Purchase of foreign currency in cash as per guidelines or directions issued by Reserve Bank of India from:
- foreign tourists or
- non-residents visiting India or
- from resident Indians on their return to India or
Disbursement of inward remittances to the recipient beneficiaries in India in cash under Money Transfer Service Scheme (MTSS) of the Reserve Bank of India;

As per the RBI guidelines, a certificate is issued by the above-mentioned authorised dealers, franchise agent and sub-agent of authorised dealers, and the Full-Fledged Money Changers (FFMC) and their franchise agent to the bank that the cash withdrawal is made only for the purposes specified above conditions and the directions or guidelines issued by the Reserve Bank of India have adhered. The details of “authorised dealer” can be referred from

Foreign Exchange Management Act, 1999 under sub-section (1) of section 10 (42 of 1999). The relevant notification from the Ministry of Finance, Central Board of Direct Taxes, can be accessed here:

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Frequently Asked Questions

Common questions about TDS Exemption on Cash Withdrawals for Authorised Dealers.

The notification issued by the Central Board of Direct Taxes (CBDT) exempts cash withdrawals made by authorized dealers, their franchise agents and sub-agents, and Full-fledged Money Changers (FFMCs) licensed by the Reserve Bank of India, and their franchise agents from Tax Deducted at Source (TDS) under Section 194N, subject to certain conditions.

The TDS exemption is applicable if the cash withdrawal is made for the purpose of purchasing foreign currency in cash from foreign tourists, non-residents visiting India, or resident Indians returning to India, as per RBI guidelines. It is also applicable if the cash withdrawal is for disbursing inward remittances to recipient beneficiaries in India under the Money Transfer Service Scheme (MTSS) of the RBI.

Authorized dealers are defined under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999. They are entities authorized by the RBI to deal in foreign exchange or foreign securities.

No, the TDS exemption is applicable only if the cash withdrawal is made for the specific purposes mentioned in the notification, which are purchasing foreign currency in cash as per RBI guidelines or disbursing inward remittances under MTSS.

Authorized dealers, their franchise agents and sub-agents, and FFMCs and their franchise agents need to issue a certificate to the bank stating that the cash withdrawal is made only for the purposes specified in the notification and that the RBI's guidelines have been adhered to.

The notification issued by CBDT came into force with effect from 1st September 2019.

No, the exemption applies only to cash withdrawals made for the specific purposes mentioned in the notification, which are purchasing foreign currency in cash as per RBI guidelines or disbursing inward remittances under MTSS.

No, the TDS exemption on cash withdrawals is applicable only to authorized dealers, their franchise agents and sub-agents, and FFMCs licensed by the RBI, and their franchise agents.

Yes, the authorized dealers, franchise agents and sub-agents, and FFMCs and their franchise agents must maintain a separate bank account, and the cash withdrawal should be made only from that account for the specified purposes.

The relevant notification from the Ministry of Finance, Central Board of Direct Taxes, can be accessed through the provided link in the article.