Utility Developed by CBDT, Helpful in Ascertaining TDS Rates on Cash Withdrawals

On Sunday, the Income Tax Department introduced a utility for the banks and post offices which will help them in ascertain the rates of TDS (Tax Deducted at Source) on cash withdrawal of Rs. 20 lakhs or more, if the assessee has not filed the income tax return and that of Rs. 1 crore or more, if the assessee has filed the income tax return.

The utility will help the post offices and the banks in ascertaining the TDS rates by entering the Permanent Account Number of the assessee withdrawing the cash. According to the notification issued by the Central Board of Direct Taxes (CBDT), on entering the PAN number, the utility will display the following content, “TDS is deductible at the rate of 2% if cash withdrawal exceeds Rs. 1 crore” [if the person withdrawing cash is a filer of the income-tax return] and “TDS is deductible at the rate 2% if cash withdrawal exceeds Rs. 20 lakh and at the rate of 5% if it exceeds Rs. 1 Crore” [if the person withdrawing cash is a non-filer of the income-tax return].”

CBDT informed that the utility will be available for download sine 1st July 2020, under the name “Verification of applicability u/s 194N Get the brief knowledge about newly created section 194N for TDS on withdrawal cash. We’ve also written objectives, advantages and challenges of section 194N. Read more” under the official website of the Income Tax Department www.incometaxindiaefiling.gov.in. The utility is provided to the banks as well as the post offices through web-services so that the process remains automated and liked to the bank’s internal core solutions.

The department found that the number of cash withdrawals, by the assesses who have not filed the income tax returns Easy guide to file an income tax return for the FY (financial year) 2019-20. Also, we added the document checklist related to Personal, Income, tax, bank, real estate, investment, etc. Read more , were increasing and to curb such transactions, the utility is introduced by the government. The utility will not only reduce such transactions but will also help in keeping a track of cash withdrawals by the non-filers, curb black money and increase the tax compliance.

Starting this month, the government has also changed some rules for cash withdrawal from the banks and post offices. Under the modified Income Tax Act, the threshold for withdrawal by the non-filers have been reduced to Rs 20 lakhs and the rate of TDS on cash withdrawals on amounting to Rs. 1 crore or more ah been increased to 5%.

The department informed that since the launch, the utility has recorded more than 55,000 verification requests from the banks and the post offices.

CBDT Official Press Release