In a major development, the Central Board of Direct Taxes, the Government of India has provided utilities to ensure TDS Applicability Rates on Cash Withdrawal. Income Tax Department has facilitated new functions for the bank and post office through which they can ascertain the level of TDS application of cash withdrawals above Rs 20 lakh in case of non-filer of income tax returns and above Rs 1 crore in case the filer of income tax returns. So far, more than 53,000 requests verification has been successfully implemented at these facilities.

CBDT said that this function is available as an application 194N Verification u / s at www.incometaxindiaefiling.gov.in since July 1, 2020, was also made available to the Bank through a web-service that the whole process can be automated and linked to core banking solutions Bank's internal.

What this new function?

Explaining the details of this facility, CBDT said that the current Bank / Post Office has only to enter the PAN of the person withdrawing cash to ensure that the applicable rate of TDS. Entering the PAN, the message will be directly displayed on the utility department: TDS is deductible of 2% if cash withdrawals exceeding Rs. 1 crore [if people withdraw cash is a filer of income tax returns] and TDS is deducted at a rate of 2% if cash withdrawals exceeding Rs. 20 lakh and at a rate of 5% if it exceeds Rs. 1 Crore [if people withdraw cash is a non-filer of income tax returns].

CBDT added that data on cash withdrawals indicate that a large amount of cash withdrawn by people who have never filed income tax returns. To ensure the submission of returns by these people and to keep track of cash withdrawals by non-rapporteur, and to curb black money, the Finance Act, 2020 w.e.f. July 1st, 2020 amended the Income Tax Act to further lower the threshold for cash withdrawal of Rs. 20 lakh for the application of this TDS for non-rapporteur and also mandated TDS at a higher level of 5% on cash withdrawals exceeding Rs. 1 crore by non-reporter.

It may be noted that in order to prevent cash transactions and move toward less cash economy, the Finance (No.2) Act, 2019 has been included in section 194N w.e.f. Income Tax Act 1 September 2019 to provide the levy of TDS @ 2% on cash withdrawals exceeding Rs. 1 crore of bank/post office account / s is subject to certain exceptions.

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Saravvanan R
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