On Sunday 12th July, 2020 the Income Tax Department has facilitated a new functionally for banks and as well post offices to ascertain the applicability rates of TDS on cash withdrawal of above ₹ 20 lakh in case of persons who have not filed their income tax return and that of above ₹ 1 crore in case of a filer of ITR.
More than 53,000 requests for verifying TDS rates applicable on cash withdrawal have been processed successfully by the IT department to the banks and the post offices.
The Central Board of Direct Taxes (CBDT) said in the statement that “Now banks and post offices have to only enter the PAN of the person who is withdrawing cash for ascertaining the applicable rate of TDS.”
CBDT said that “this functionality available as “Verification of applicability u/s 194N” on www.incometaxindiaefiling.gov.in since 1st July 2020, is also made available to the Banks through web-services so that the entire process can be automated and be linked to the Bank’s internal core banking solution.”
On entering PAN (Permanent Account Number) by the bank or the post office, a message will be instantly displayed on the departmental utility: “TDS is deductible at the rate of 2% if cash withdrawal exceeds ₹ 1 crore”, in case the person withdrawing cash is a filer of the ITR.
In also addition, another side in case the person withdrawing cash is a non-filer of ITR, the message shown would be,”TDS is deductible at the rate of 2% if cash withdrawal exceeds ₹ 20 lakh and at the rate of 5% if it exceeds ₹ 1 crore.”
The CBDT said that “The data on cash withdrawal indicated that huge amount of cash is withdrawn by the persons who have never filed income-tax returns.”
It may be noted that to discourage cash transactions and move towards cashless economy, the Finance (No.2) Act, 2019 has inserted section 194N in the Income Tax Act from 1st September, 2019 to provide for levy of TDS @ 2% on cash withdrawal exceeding ₹ 1 crore from a Bank or Post Office accounts subject to certain exceptions.