You will have more chances of getting caught in the tax net, know what is the new rule
New TDS rules. In order to reduce cash transactions and better implement tax compliance, the tax department has changed the rules of TDS. From this month, the new TDS rule will be applicable on the amount withdrawn from the bank and post office. Till now, if you used to withdraw cash in excess of 1 crore rupees in a year, then you had to pay 2% TDS (tax deducted at source). But from July 1, the new TDS rule has come into force.
Now the TDS rate for making a high value cash transaction of more than Rs 20 lakh in a financial year will depend on whether you have filed Income Tax Return (ITR) in the last three years.
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TDS rule for those who have filed returns in the last 3 years
In the 2019 budget, the government had included a new section 194N in the income tax under which 2% TDS would have to be paid for withdrawing more than Rs 1 crore cash from a bank account. This rule will also be applicable to withdraw cash from post office accounts.
According “If someone withdraws cash of Rs 99 lakhs in a financial year and then withdraws another Rs 1.50 lakhs, then only Rs 50,000 will have to pay 2% TDS.”
However, for those whose PAN card is not updated in the bank’s records, TDS can be levied up to 20% under section 206AA of Income Tax.
If you have filed income tax returns in the last three years and submitted PAN, then withdrawing less than 1 crore cash will not attract any TDS.
If you withdraw cash from the bank, the bank can ask for ITR-V to make sure that you are filing returns. Along with this, you can also ask the bank to check with the Income Tax Department’s e-filing portal.
Rules for those who do not file ITR returns
If you have not filed your income tax return in the last three years, you may have to submit a huge TDS.
No TDS on withdrawing cash up to 20 lakh rupees.
2% TDS from Rs 20 lakh to Rs 1 crore.
5% TDS for withdrawing more than 1 crore cash.
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