Income Tax Department introduces a new utility for banks, post offices to check TDS rate on high value cash withdrawals - (12 Jul 2020)
The Income Tax Department has facilitated a new functionality for Banks and Post offices through which they can ascertain the TDS applicability rates on cash withdrawal of above Rs 20 lakh in case of a non-filer of the income-tax return and that of above Rs 1 Crore in case of a filer of the income-tax return. Now the bank/post office has to only enter the PAN of the person who is withdrawing cash for ascertaining the applicable rate of TDS. The functionality available as "Verification of applicability under Section 194N of Income-tax Act, 1961 " 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.
Tax is deducted by the payer and is remitted to the Government by the payer on behalf of the payee. The provisions of deduction of tax at source are applicable to several payments such as salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. In respect of payments to which the TDS provisions apply, the payer has to deduct tax at source on the payments made by him and he has to deposit the tax deducted by him to the credit of the Government. On entering PAN, a message will be instantly displayed on the departmental utility that TDS is deductible at the rate of 2 per cent if cash withdrawal exceeds Rs 1 crore (if the person withdrawing cash is a filer of ITR) and TDS is deductible at the rate 2 per cent if cash withdrawal exceeds Rs 20 lakh and at the rate of 5 per cent if it exceeds Rs 1 Crore (in case of non-filers).
To ensure filing of return by these persons and to keep track on cash withdrawals by the non-filers, and to curb black money, the Finance Act, 2020 with effect from July 1, 2020 further amended Income-tax Act. In order to discourage cash transactions and move towards less cash economy, the Finance (No. 2) Act, 2019 has inserted a new Section 194N in the IT Act, 1961, to provide for levy of tax deduction at source (TDS) @2% on cash payments in excess of 1 crore rupees in aggregate made during the year, by a banking company or cooperative bank or post office, to any person from one or more accounts maintained with it by the recipient.
Tags : TDS RATE CASH WITHDRAWAL APPLICABILITY