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CBDT introduces ITR Filing Compliance Check for TDS on Cash Withdrawals Under Section 194N

cbdt-introduces-itr-filing-compliance-check-for-tds-on-cash-withdrawals-under-section-194n

CBDT provides ITR Filing Compliance Check Functionality for Scheduled Commercial Banks. The Finance Act, 2020 amended the provisions of section 194N for TDS on Cash Withdrawals prescribing lower threshold limit and a higher rate of TDS on cash withdrawals for non-filers of the income tax return.
In a press release dated 02-09-2020, CBDT has stated that 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 Director General of Income-tax (Systems) has notified the procedure and format for providing notified information to the Scheduled Commercial Banks.

On August 31, 2020, CBDT notified "Scheduled Commercial Banks" listed in the Second Schedule of the Reserve Bank of India Act, 1934 for the purposes of section 138(1)(a)(ii) vide Notification No. 71/2020 dated 31-08-2020. AS per this notification, the income tax authorities can share information with scheduled commercial banks.

Section 138 of the Income Tax Act, 1961 empowers income tax authorities to share information or details of its taxpayers with other agencies. Section 138 of the Income-tax Act, 1961 deals with mechanism for disclosure of information in respect of assessees under the Act. Sub-section (1) of this section provides that CBDT or Income-tax authorities specified by it may furnish certain information, as obtained in performance of their  functions, to authorities either dealing with the laws related to any tax, duty, cess or foreign exchange or to authorities (notified by  Central Government) who are performing their functions under any other law, subject to certain conditions. It is further provided that Pr.CCIT /CCIT /Pr.CIT or CIT may, if satisfied in public interest, can decide to furnish information pertaining to any assessee, which has been obtained in the performance of functions by any Income-tax authorities.


However, sub-section (2) of section 138, which starts with a non-obstante clause, stipulates that Central Government, on consideration of certain factors, can notify that no information or document would be furnished in respect of any matter relating to any class of assessees or except to such authorities as specified.

The Press Release dated 02-09-2020 reads as follows-


Government of India
Department of Revenue
Ministry of Finance
Central Board of Direct Taxes

New Delhi, 2nd September, 2020

PRESS RELEASE

CBDT provides ITR Filing Compliance Check Functionality for Scheduled Commercial Banks

Central Board of Direct Taxes in exercise of powers conferred under section 138(1)(a) of Income Tax Act, 1961, has issued Order inF.No. 225/136/2020/ITA.II dated 31.08.2020, for furnishing information about IT Return Filing Status to Scheduled Commercial Banks, notified vide notification No. 71/2020 dated 31.08.2020 under subclause (ii) of clause (a) of sub-section (1) of section 138 of the Act.

The data on cash withdrawal indicated that huge amount of cash is being withdrawn by the persons who have never filed income-tax returns. To ensure filing of return by these persons and to keep track on cash withdrawals by the non-filers, and to curb black money, the Finance Act, 2020 w.e.f. 1st July, 2020 further amended Incometax Act, 1961 to lower the threshold of cash withdrawal to Rs. 20 lakh for the applicability of TDS for the non-filers and also mandated TDS at the higher rate of 5% on cash withdrawal exceeding Rs. 1 crore by the non-filers.


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.


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 salient features of the using functionality are as under: 


a. Accessing “ITR Filing Compliance Check”: The Principal Officer & Designated Director of SCBs, which are registered with the Reporting Portal of Income-tax Department (https://report.insight.gov.in) shall be able to use the functionality after logging into the Reporting Portal using their credentials. After successfully logging in, link to the functionality “ITR Filing Compliance Check” will appear on the home page of the Reporting Portal.


b. Preparing request (input) file containing PANs: The CSV Template to enter PAN details can be downloaded by clicking on “Download CSV template” button on the “ITR Filing Compliance Check” page. PANs, for which IT Return filing status is required, are required to be entered in the downloaded CSV template. The current limit of PANs in one file is 10,000.


c. Uploading the input CSV file: Input CSV file may be uploaded by clicking on Upload CSV button. While uploading, “Reference Financial Year” is required to be selected. Reference Financial Year is the year for which results are required. If selected Reference Financial Year is 2020-21 then results will be available for Assessment years 2017-18, 2018-19 and 2019-20. Uploaded file will start reflecting with Uploaded status.


d. Downloading the output CSV file: After processing, CSV file containing IT Return Filing Status of the entered PANs will be available for download and “Status” will change to Available. Output CSV file will have PAN, Name of the PAN holder (masked), IT Return Filing Status for last three Assessment Years. After downloading of the file, the status will change to Downloaded and after 24 hours of availability of the file, download link will expire and status will change to Expired.


Scheduled Commercial Banks can also use API based exchange to automate and integrate the process with the Bank’s core banking solution. Scheduled Commercial Banks are required to document and implement appropriate information security policies and procedures with clearly defined roles and responsibilities to ensure security of information.


(Surabhi Ahluwalia)

Commissioner of Income Tax

(Media & Technical Policy)

Official Spokesperson, CBDT


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