ET Now DigitalUpdated Jul 04, 2020 | 16:24 IST
Source:-Times Now News
New Delhi: The income tax department has made the calculation of TDS (tax deducted at source) on cash withdrawals easier for banks and other financial institutions. A tool to calculate the TDS rate under Section 194N has been enabled in the income tax department’s e-filing portal.
However, this tool has been made available only for official use by banks, co-operative societies, and post offices. The tool is available on the IT department’s e-filing portal. Financial institutions can click on ‘Verification of applicability u/s 194N’ under the ‘Quick Links’ menu on the department’s e-filing portal to access the tool and calculate TDS for a recipient.
To verify the applicability of the TDS rate, one can go to the link and give his or her PAN (Permanent Account Number) and mobile number where an OTP will be shared. Banks and other financial institutions can use the facility to calculate the TDS rate applicable in your case.
Alternatively, you may be asked to sign a declaration letter along with a copy of the acknowledgment of return of Income (ITR-V) of FY 2018-19, FY 2017-18, and FY 2016-17 for verification purposes, as reported by LiveMint.
Section 194N had been introduced in the Income Tax Act in July ’19 by the government to discourage cash transactions and promote the digital economy by making TDS at the rate of 2 per cent applicable on cash withdrawals over and above Rs 1 crore.
With effect from July 1 this year
With effect from July 1 this year, the rules have been amended and lowered the threshold of Rs 1 crore to Rs 20 lakh. It has further tied TDS on cash withdrawals to IT returns. TDS will be applicable for cash withdrawals of Rs 20 lakh and above for those who have not filed their income tax returns (ITRs) for the past three years.
For those who have filed their returns regularly, TDS of 2 per cent will be applicable for cash withdrawals of above Rs 1 crore.