Daily Current Affairs 2020 CBDT launches a new Utility Tool for Banks and Post Offices for Proper Implementation of Finance Act 2020 | Daily Current Affairs 2020

CBDT launches a new Utility Tool for Banks and Post Offices for Proper Implementation of Finance Act 2020

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The Income-Tax Department, on Sunday, announced a new tool for banks and post offices to ensure tax deduction at source (TDS) on cash withdrawals beyond a certain threshold.

Any non-filer of Income-Tax Return is subject to TDS if he/she withdraws ₹20 lakh or more in a financial year. The TDS rate would be 2 per cent (of withdrawn amount over ₹20 lakh). This rate will go up to 5 per cent if the withdrawal is more than ₹1 crore. Here, too, TDS will be applicable on the amount over ₹1 crore. This system came into effect from July 1. Earlier, a system was introduced with effect from September 1, 2019, to levy TDS at the rate of 2 per cent for any individualwho has filed returns and withdraws cash of ₹1 crore or more from a bank or post office.

Verification requests

Now, in order to facilitate this arrangement, a new functionality for banks and post offices will help them ascertain the TDS applicability rates on cash withdrawal of above ₹20 lakh in case of a non-filer of the income-tax return and that of above ₹1 crore in case of a filer of income-tax returns. So far, more than 53,000 verification requests have been executed successfully on this facility.

“This functionality available as ‘verification of applicability u/s 194N’ on www.incometaxindiaefiling.gov.in since July 1 is also made available to banks through web-services so that the entire process can be automated and be linked to the bank’s internal core banking solution,” said the Central Board of Direct Taxes (CBDT).

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 per cent if the cash withdrawal exceeds ₹1 crore” (if the person withdrawing cash is a filer of income-tax returns), and “TDS is deductible at the rate 2 per cent if cash withdrawal exceeds ₹20 lakh and at the rate of 5 per cent if it exceeds ₹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 a huge amount of cash is being withdrawn by persons who have never filed income-tax returns. To ensure filing of return by these persons and to keep track on cash withdrawals by non-filers and to curb black money, the Finance Act, 2020, further amended Income-Tax Act to lower threshold of cash withdrawal to ₹20 lakh for the applicability of this TDS for the non-filers, and also mandated TDS at the higher rate of on cash withdrawals exceeding ₹1 crore by non-filers.

Source: The Hindu

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