Banks can find whether a person, withdrawing large amount of money, has filed Income Tax Return of not. If not, then banks can apply TDS (Tax Deducted at Source) in case withdrawal beyond a certain threshold.
With effect from July 1 this year, if a person has not filed income tax returns for last three consecutive years and withdrawing ₹20 lakh or more in a financial year, then TDS is applied. Rate of TDS is 2 per cent if cumulative cash withdrawal from all bank accounts in a bank in one financial year exceeding ₹20 lakh and up to ₹1 crore. In case, withdrawal amount is more than ₹1 crore then rate of TDS would be 5 per cent.
This aims to ensure filing of return by these persons and to keep track on cash withdrawals by the non-filers, and to curb black money.
Compliance check
Now, in order to facilitate the banks in this process, the Income Tax Department has 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 Officer & Designated Director of SCBs, which are registered with the Reporting Portal of Income-tax Department (https://report.insight.gov.in) will be able to use the functionality. After successfully logging in, link to the functionality “ITR Filing Compliance Check” will appear on the home page of the Reporting Portal. In one go, banks can upload up to 10,000 PAN and get details about how many have not filed returns.
Banks can also use API-based exchange to automate and integrate the process with the Bank’s core banking solution. They are required to document and implement appropriate information security policies and procedures with clearly defined roles and responsibilities to ensure security of information.
IT Department has already provided a functionality to help Bank/Post Office finding applicable rate of TDS under section 194N of the Income-tax Act, 1961 by entering the PAN of the person who is withdrawing cash.