CBDT launches a new Utility Tool for Banks and Post Offices for Proper Implementation of Finance Act 2020
The Central Board of Direct Taxes (CBDT) has informed on 12th July 2020 that a new Utility Tool has been launched that will facilitate the Banks and Post Offices across the country with the accurate TDS rate (Tax Deduction at Source) applicable on cash withdrawals.
The utility tool can be accessed by the Banks and Post Offices by visiting the web portal- ‘incometaxindiaefiling.gov.in’. The Utility Tool is available under the name’ Verification of Applicability u/s 194N’ on the portal.
The Utility Tool was developed based on the Data of Cash Withdrawal from across the country that has suggested that large amounts of cash were withdrawn by Individuals who had never filed income tax returns.
Following the Data of Cash Withdrawal, the need to curb black money and for keeping a track on a large amount of cash withdrawal made by non-filer of the income tax return was required.
For which under the Finance Act 2019- in the Income Tax Act, section 194N was inserted under which for cash withdrawal of above Rs 1 crore, a TDS of 2 percent was applicable. Section 194N under the Income Tax Act came into effect from 1st September 2019.
Under the Finance Act 2020 (came into effect from 1st July 2020), for non-filer of income tax: a TDS of 2 percent for cash withdrawal above Rs 20 lakh and a TDS of 5 percent for cash withdrawal of above Rs 1 crore was mandated.
For TDS deduction, now with the Utility Tool, Banks and Post Offices have to just enter the PAN card number of the Individual at the tool of the person who has requested cash withdrawal of above Rs 20 lakh. The Tool will immediately detect if the person is a filer or a non-filer of Income Tax Return.