“It has been decided not to levy 2 per cent TDS
on cash payments above Rs 1 crore made through APMCs, in order to make immediate payments to farmers for their produce,” the finance ministry said in a tweet.
For all other purposes, cash payments over Rs 1 crore will continue to attract a TDS
of 2 per cent, which was announced in the 2019-20 Union Budget by Finance Minister Nirmala Sitharaman as a measure to promote a less-cash economy.
But sources said the move backfired in the wholesale markets and APMCs, where large quantities of transactions are done in cash.
The step also threatened to lock liquidity from flowing into the hands of several ancillary sectors dependant on mandis like transport operators, casual labourers, along with farmers, as TDS
refunds would have come into the account a year later.
Officials said in several mandis of Maharashtra, cash had simply dried up due to the notification which had come into force from September 1, 2019. Traders were wary of making cash payments in excess of Rs 1 crore.
Traders in Saurashtra recently protested the TDS move and suspended APMC
transactions. The kharif harvesting season starts around October.
Meanwhile, the ministry in another tweet said an additional 15 per cent depreciation will be allowed on commercial vehicles.
“The move is expected to give a boost to the automobile sector by driving sales,” Sitharaman added. She had announced the doubling of depreciation rate to 30 per cent for vehicles bought until March 31, 2020.
The Centre had made the provision of levying 2 per cent TDS on cash withdrawals exceeding Rs 1 crore in the Union Budget to discourage cash transactions and move towards a less-cash economy