Income Tax returns: Banks, Post Offices can now check your ITR to deduct TDS

Income Tax returns: There is no running away for taxpayers anymore! If you are withdrawing a large amount of money and are yet to file Income Tax Returns, then banks can apply TDS (Tax Deducted at Source) in case of withdrawals beyond a certain threshold. Banks or post offices 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. 

As per the rules notified, from July 1 of this year, if a person has not filed income tax returns for the last three consecutive years and has withdrawn Rs 20 lakh or more in a financial year, then TDS is applied.  

The rate of TDS is 2 per cent if cumulative cash withdrawal from all bank accounts in a bank in one financial year exceeding Rs 20 lakh and up to Rs 1 crore. In case, the withdrawal amount is more than Rs 1 crore then the rate of TDS would be 5 per cent. 

"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,” a statement from the income tax department said.  

It added that banks can also use API-based exchange to automate and integrate the process with the Bank’s core banking solution.  

"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," the Income Tax Department said.