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Tuesday, August 11, 2020

New utility for banks, post offices to ascertain TDS for cash withdrawals

The Central Board of Direct Taxes (CBDT) said data on cash withdrawal indicated “huge amount of cash is being withdrawn by persons who have never filed income-tax returns”.

By: ENS Economic Bureau | New Delhi | Published: July 13, 2020 3:00:05 am
With this utility, the bank/post office has to now only enter the permanent account number (PAN) of the person who is withdrawing cash for ascertaining the applicable rate of TDS. (File)

The Income Tax Department has launched a new utility for banks and post offices to help ascertain the applicable Tax Deducted at Source (TDS) for cash withdrawals above Rs 20 lakh for non-filers and above Rs 1 crore for filers of income tax returns. The Central Board of Direct Taxes (CBDT) said data on cash withdrawal indicated “huge amount of cash is being withdrawn by persons who have never filed income-tax returns”.

With this utility, the bank/post office has to now only enter the permanent account number (PAN) of the person who is withdrawing cash for ascertaining the applicable rate of TDS. On entering PAN, a message will be instantly displayed on the departmental utility — “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).

“So far, more than 53,000 verification requests have been executed successfully on this facility,” a CBDT release said.

The government had, in Budget 2019-20, introduced a TDS levy of 2 per cent on cash withdrawals of more than Rs 1 crore from a bank account in one financial year to discourage payments in cash. To ensure filing of returns by these persons and to keep track on cash withdrawals by non-filers, and to curb black money, the Finance Act, 2020 had further amended Income-tax Act to lower threshold of cash withdrawal to Rs 20 lakh for the applicability of this TDS for non-filers and also mandated TDS at the higher rate of 5 per cent on cash withdrawal exceeding Rs 1 crore by non-filers.

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