CBDT issues press release on 'Verification of applicability u/s 194N' functionality in e-filing portal.
IT Department Launches TDS Verification Utility u/s 194N in its Official Web Portal for Banks, POs
Giving a decisive result to the purpose of gathering those taxpayers’ details, who are skipping timely IT Return but withdrawing heavy cash through Banks, Co-operative Societies and POs, Income Tax Department of India has announced the launch of a new online tracking utility service on Sunday, July 12, 2020 for Banks/Co-operative Societies/POs that will notify them on correct TDS applicability for all cash withdrawals. As explained by Central Board of Direct Tax (CBDT), this facility is now available in IT Department’s official e-filing website ‘www.incometaxindiaefiling.gov.in’ in the link ‘Verification of applicability u/s 194 N’. Banks and POs can use this utility through web-service for a fast and completely automated processing facility and further link it to their internal core banking solution. As per official statement, IT Department has already processed more than 53,000 requests for verifying Tax Deduction at Source (TDS) rates applicable on cash withdrawals under these two specific situations:
- For timely IT Return filers, when they are withdrawing more than INR 1 crore.
- For non-filers (on whom, as per Finance Bill 2020 amendment on 194N, more TDS will be levied on cash withdrawal from Banks/POs/Co-Operative Societies, based non filing of IT Return for three years), when they are withdrawing more than INR 20 lakh.
How Banks and POs can Use the Utility?
- With withdrawer’s PAN details.
Banks/POs can now access the link ‘Verification of applicability u/s 194N’ given in IT Department’s official e-filing website, they are to follow the given procedure:
- Fill in withdrawer’s PAN and Mobile Number. Agree with the restriction of using the utility.
- Based on these information, the utility will auto-generate message specific for the two types of withdrawers as mentioned above:
- For timely IT Return filers, the message reads as, “TDS is deductable at the rate 2 per cent if cash withdrawal exceeds Rs 1 crore.”
- For non-filers, the message reads as, “TDS is deductable 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.”
- Banks and POs can use the web utility to link in the internal core banking solutions to make the process fast and precise.
Purpose of Online TDS Utility Launched by IT Department
- To track the taxpayers who are not filing their IT Returns but regularly making heavy cash withdrawals.
- To restrict illegal dealing of blank money
It is important for every taxpayer to know about the guidelines of 194N:
Section 194 N was launched in Union Budget 2019 intended to restrict cash transaction in the country and promote the digital economy. Under this section, as proposed by Honourable Finance Minister, Nirmala Seetharaman in Budget 2019, any cash withdrawal exceeding INR 1 crore will have a compulsion of deduction of Tax at Source (TDS).
Changes in Clause 84 of Finance Act 2020 give the latest amendments that are done in Section 194 N:
- Scope of TDS on cash withdrawal is extended as:
- Those who are not submitting IT Return for three years:
- 2% rate is deducted if withdrawal exceeds INR 20 lakh but less than INR 1 crore.
- 5% rate is deducted if the withdrawal is more than INR 1 crore.
- Those who are not submitting IT Return for three years:
For others, who are filing IT Return regularly, TDS @ 2% will be charged for cash withdrawal more than INR 1 crore.
Government of India
Department of Revenue
Ministry of Finance
Central Board of Direct Taxes
New Delhi, 12th July, 2020
CBDT provides Utility to ascertain TDS applicability rates on cash withdrawals
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 Income Tax Return(ITR) and that of above Rs. 1 crore in case of a filer of the ITR. So far, more than 53,000 verification requests have been executed successfully on this facility.
This functionality has been available as “Verification of applicability u/s 194N” on www.incometaxindiaefiling.gov.in since 1st July, 2020 and has also been 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.
It is stated that 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. On entering PAN, a message will be instantly displayed on the departmental utility: “TDS is deductible at the rate of 2% 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% 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 ITR].
It is further stated that the data on cash withdrawal indicated that huge amount 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 w.e.f. 1st July, 2020 further amended Income-tax Act, 1961 to lower the threshold of cash withdrawal to Rs. 20 lakh for the applicability of this TDS for non-filers and also mandated TDS at a higher rate of 5% on cash withdrawal exceeding Rs. 1 crore by the non-filers.
It may be noted, that, in order to discourage cash transactions and move towards less-cash economy, the Finance (No.2) Act, 2019 had inserted section 194N in the Income-tax Act, 1961 w.e.f. 1st September, 2019 to provide for levy of TDS @ 2% on cash withdrawal exceeding Rs. 1 crore from a Bank/Post Office account/s subject to certain exceptions.
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT
Section 194 N Amendment In Finance Bill 2020 – TDS Rate Goes Up On Cash Withdrawal
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