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RA
Ramesh Kumar Sharma Author
Original Post
13

My link branch has started deducting 2% TDS under Section 194N because my cash withdrawals for CSP customer disbursements exceeded ₹20 Lakhs in this financial year.

How do BC Mitras get 100% exemption from Section 194N TDS?

Have you obtained a Section 194N TDS exemption certificate from your aggregator / bank?

616 votes

2 Responses

Accepted Solution / Best Answer
RA
Rajesh Sharma Best Answer
(edited )
20

As per CBDT Notification No. 70/2019 and RBI guidelines, Business Correspondents (BCs) and White Label ATM operators are 100% EXEMPT from Section 194N TDS deduction on cash withdrawals made for banking operations.

Your branch is deducting TDS because they haven't flagged your current account as a Banking Correspondent Kiosk Pool Account in their Finacle / CBS software.

Documents to submit to your branch:

  1. Copy of CBDT Notification No. 70/2019
  2. Your BC Agent Agreement with the bank / aggregator
  3. A written request letter to the Branch Manager citing the exemption
  4. Recent NPCI / UIDAI registration certificate as BC operator

Once the Branch Manager flags the account in CBS, TDS deductions stop immediately and previously deducted TDS can be claimed as refund in ITR.

Attachments:
CBDT_Circular_Section_194N_TDS_Exemption_Declaration_BC.pdf (627 KB)
AM
Amit Vikram Verma
#1
20

Also file Form 15G at the beginning of each financial year as an additional safeguard:

Form 15G — Declaration under Section 197A
→ Submit to your bank branch at the start of April
→ Valid for the entire financial year
→ Prevents TDS deduction even if the bank misses the CBS flag

If TDS was already deducted, claim it as a tax refund in your ITR filing — it's fully refundable since BC income used for customer withdrawals is not taxable profit.

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