Banks Will Deduct Tax From Your Cash Withdrawal By Checking Income Tax Returns
Sounds Scary! Isn’t it?
Now there is no running away for tax collectors anymore as they have imposed these rules.
How Does It Work?
So, consider the case where you are withdrawing a large amount of money and yet to file your Income Tax Returns.
In this case, now banks can apply TDS (Tax Deducted at Source) in case of withdrawals beyond a certain threshold limit.
For doing so, now Banks or post offices can check the status of income tax returns or ITRs of their customers based on their Permanent Account Number (PAN).
According to this facility, banks or post offices can get the details of the applicable rate of TDS under Section 194N of the Income-tax Act, 1961 by entering the PAN of the person who is withdrawing cash.
What Section 194N of the Income-tax Act?
As per Section 194N of the Income-tax Act, 1961 mandates, banks and post offices to deduct tax on cash withdrawal made by any person if the sum of aggregate withdrawals in a financial year exceeds Rs 1 crore.
Also, the tax shall be deducted at the rate of 2% on the amount of cash withdrawal exceeding Rs. 1 crore.
Another case wherein a person has not filed income tax returns for the last three consecutive years and has withdrawn Rs 20 lakh or more in a financial year, then in this case also, TDS will be applied.
The rate of TDS of 2 percent will be applied if cumulative cash withdrawal from all bank accounts in a bank in one financial year exceeds Rs 20 lakh and up to Rs 1 crore.
If the withdrawal amount is more than Rs 1 crore then the rate of TDS would be 5 percent.
What Does The Income Tax Department Say?
The income tax department said, “Income Tax Department has already provided a functionality “Verification of applicability u/s 194N” on www.incometaxindiaefiling.gov.in for Banks and Post offices since 1st July, 2020. Through this functionality, Bank/Post Office can get the applicable rate of TDS under section 194N of the Income-tax Act, 1961 by entering the PAN of the person who is withdrawing cash,” in a statement from.
Further, the income tax department said, “The Department has now released a new functionality “ITR Filing Compliance Check” which will be available to Scheduled Commercial Banks (SCBs) to check the IT Return filing status of PANs in bulk mode. The Principal Director General of Income-tax (Systems) has notified the procedure and format for providing notified information to the Scheduled Commercial Banks,”.