1 min read.Updated: 21 Mar 2021, 02:49 PM ISTRenu Yadav
The bank will deduct TDS (tax deducted at source) under Section 194N of the Income Tax Act.
The purpose of the regulation is to catch hold of those who don’t file tax returns and boost digital transactions.
If you have not filed your income tax return and are withdrawing cash from your bank account, the bank will deduct TDS (tax deducted at source) under Section 194N of the Income Tax Act. This rule was introduced last year from 1 July. The purpose of the regulation is to catch hold of those who don’t file tax returns and boost digital transactions.
“The rates and limits depend upon whether you have filed ITRs in three preceding assessment years for which time limit to file ITR has expired. If you have filed ITR for any one of such 3 assessment years, then the TDS is not there for withdrawals upto ₹1 crore in a year and for cash withdrawals exceeding ₹1 crore, TDS rate is 2%," said Sujit Bangar, founder, Taxbuddy.com.
“If you have not filed ITRs for all of the preceding 3 assessment years, then the TDS will be applicable for withdrawals of ₹20 lakh and above. In such a case, the rate will be 2% for withdrawals from ₹20 lakh to ₹1 crore and the rate will be 5% after withdrawals cross ₹1 crore," he added.
The TDS will be applicable in case the withdrawals exceed the limit.
TDS will be applicable on withdrawals from banks, co-operative banks and post offices. The limit will apply on all accounts in the same bank. So, if you have multiple accounts with the same bank, then TDS will be applicable once you breach the mandatory limit across all the accounts or in any one of the account with the same bank. But for accounts with different banks, the limit will apply separately.
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