The requests have been processed through a new functionality on the IT website meant for banks and post offices for ascertaining the TDS rates applicable on cash withdrawals, the Central Board of Direct Taxes said Sunday.
CBDT said that the functionality of “Verification of applicability u/s 194N” on the income tax website has been available since July 1, 2020, and has 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.
“Banks or post offices only have to enter the PAN of the person who is withdrawing cash for ascertaining the applicable rate of TDS, which will show an automatic instant message displaying the TDS rate that is to be deducted,” the Board said in a statement.
CBDT said that the data on cash withdrawal indicated that huge amounts of cash is being withdrawn by the persons who have never filed income-tax returns.
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 had further amended Income-tax Act to lower threshold of cash withdrawal to Rs 20 lakh for the applicability of TDS for the non-filers and also mandated TDS at the higher rate of 5% on cash withdrawal exceeding Rs 1 crore by the non-filers.
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 September 1, 2019 to provide for levy of TDS at 2% on cash withdrawal exceeding Rs 1 crore from a bank or post office account, subject to certain exceptions.