Do you know that if you have not filed your Income tax returns for three consecutive Financial years and you have withdrawn more than 20 lakh Rupees in the next financial year then TDS @ 2% would be deducted by the Bank?
Yes, you heard it right. The new Finance Bill passed by the Lok Sabha comes up with such a provision.
A new proviso has been inserted to Section 194N, which changes the threshold limit for deduction of tax from Rs. 1 crore to Rs. 20 lakhs if the person, has not filed return of income (ITR) for three previous years immediately preceding the previous year in which cash is withdrawn, and the due date for filing ITR under section 139(1) has expired.
The deduction shall be @ 2% on the amount withdrawn in excess of 20 Lakh.
Please note that the word used is Person. As per Income tax Act, the definition of Person is
1. an Individual;
2. a Hindu Undivided Family (HUF);
3. a Company;
4. a Firm
5. an association of persons or a body of individuals, whether incorporated or not;
6. a local authority; and
7. every artificial juridical person not falling within any of the preceding sub-clauses.
8. Association of Persons or Body of Individuals or a Local authority or Artificial Juridical Persons shall be deemed to be a person whether or not, such persons are formed or established or incorporated with the object of deriving profits or gains or income.
So, even if a Company has not filed its Return for 3 years and the withdrawal is more than 20 Lakhs, TDS @ 2% would be applicable.
However, if the returns are filed, then the TDS deduction would be 5% on the amount withdrawn in excess of Rs. 1 crore.
So, ensure that the returns are filed on time and comply with new norms of Government.
The above provision is applicable from 01st July, 2020.