Have you not filed income tax returns for the past three years? Then, per the latest amendment to the scope of Sec 194-N of the Income Tax Act, any cash withdrawal from your savings / current bank account exceeding Rs. 20 lakhs in a financial year will attract TDS at the rate of 2%. If the amount withdrawn is more than Rs. 1 crore in the financial year and tax returns for the three prior years have been duly filed, the TDS rate will be 5%. However, for persons who have not filed the tax returns, TDS will be applicable on the amount of cash withdrawn at the rate of 5%. This law is in place to encourage more digital transactions.
Withdrawals from banks, cooperative societies, and post offices are considered for this calculation.
Though the new TDS rules came to force on 1 July 2020, the laws apply to all the cash withdrawals made starting from 1 April 2020, the beginning of the financial year 2020-2021.
The e-filing website of the income tax department has introduced the facility to check whether the individual has filed ITR for the last three financial years or not and the rate of TDS leviable on the amount of cash withdrawn.
