CBDT issues Press Note on online Tool for TDS on Cash Withdrawal under section 194N

CBDT issues Press Note on online Tool for TDS on Cash Withdrawal under section 194N: In a press note dated 12.07.2020, the CBDT has stated that a Utility with new functionality for Banks & Post offices to ascertain the TDS applicability rates on cash withdrawal of above Rs.20 lakh in case of non-filers of ITRs & that of above Rs.1 crore in case of filers of ITRs. The utility is available on http://www.incometaxindiaefiling.gov.in/home

In this article dated 04.07.2020 the information was published on Online Tool to determine TDS rate u/s 194N launched by the Income tax department and the same was enabled on e-Filing portal for Banks, Co-operative societies and Post offices.

The press note says, “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 the income-tax return and that of above Rs. 1 Crore in case of a filer of the income-tax return.”

It further says so far, more than 53,000 verification requests have been executed successfully on this facility.

The online tool was made functional since 1st July, 2020, from the date newly amended provisions of section 194N was made effective, to facilitate banks through web-services so that the entire process can be automated and be linked to the Bank’s internal core banking solution.

Section 194N dealing with TDS on cash withdrawals was applicable from 01-09-2019 and was first introduced by Finance (No. 2) Act, 2019.

The said section 194N is again amended by the Finance Act, 2020 by clause 83A of the Finance Bill, 2020 as passed by the Lok Sabha.

It may be noted that the amendment in section 194N was not in the original Finance Bill, 2020 which was introduced in the Parliament (Lok Sabha) on February 1, 2020.

Finance Act, 2020 has lowered the threshold limit for TDS on Cash Withdrawals and also increased the rate of TDS under section 194N in case of non-filers of return.

Explaining the details of this facility, CBDT said 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 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].

The note further states that in order 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 to lower the threshold of cash withdrawal to Rs. 20 lakh for the applicability of this 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.

Section 194N does not apply to certain transactions.

Read the full text of the Press Note dated 12.07.2020 on Section 194N TDS on Cash Withdrawals online tool

Government of India

Department of Revenue

Ministry of Finance

Central Board of Direct Taxes

New Delhi, 12th July. 2020

PRESS RELEASE

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 the income-tax return and that of above Rs. 1 Crore in case of a filer of the income-tax return. So far,more than 53,000 verification requests have been executed successfully on this facility.

CBDT today said that this functionality available as “Verification of applicability u/s 194N” on www.incometaxindiaefiling.gov.in since 1st July 2020,is 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.

Explaining the details of this facility, CBDT said 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 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 said 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 to lower threshold of cash withdrawal to Rs. 20 lakh for the applicability of this 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.

It may be noted that in order to discourage cash transactions and move towards less cash economy, the Finance (No.2) Act, 2019 has inserted section 194N in the Income Tax Act 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.

(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson. CBDT

Download Copy of Press Note dated 12.07.2020 on Section 194N - TDS on Cash Withdrawals online tool in pdf format.

Read more on Section 194N-TDS on Cash Withdrawals

Changes proposed in Income-Tax by the Finance Bill 2019

Changes in TDS Rates and Provisions in Union Budget 2019

CBDT Notification for TDS Challan and TDS Return under 194M and 194N

Important aspects of TDS on Cash Withdrawal under Section 194N after Union Budget 2019

CBDT Notifications issued so far under section 194N

Notification No. 68/2019 dt 18-09-2019 on Exemption from section 194N