Standard Operating Procedure (SOP) for deduction of TDS under Sec 194 in Post Office (DOP) Finacle. SB Order 18/2022.
Download SOP for TDS Deduction in Post Office in PDF
Introduction
As per Section 194(N) of IT Act-1961 inserted through Finance Act (No. 2) of 2019 and further amended through Finance Bill 2020, TDS in respect of cash withdrawal by an account holder of National Savings Schemes taken together has to be deducted as follows.
(a). In case account holder is Income Tax Return (ITR) filers, 2% TDS is applicable on all cash withdrawal in excess of Rs 1 crore from 01.09.2019.
(b). Incase account holder is non-Income Tax Return (ITR) filers
i). If aggregate cash withdrawals exceed Rs. 20 Lakhs, but does not exceed Rs. 1 Crore during a financial year, 2% of TDS on the amount exceeding Rs. 20 Lakhs is applicable from 01.07.2020.
ii). If aggregate cash withdrawals exceed Rs. 1 Crore during a financial year, 5% of TDS on the amount exceeding Rs. 1 Crore is applicable from 01.07.2020.
2. Provision for the deduction under Section 194N of IT Act was not available in Finacle and the post offices were ordered to deduct the TDS manually. Now, the functionality for deduction of TDS under Section 194N of IT Act 1961 has been deployed in Finacle and five patches were deployed on 30.05.2022, 22.06.2022 and 04.08.2022.
3. While doing withdrawal transactions using CTM menu, if cumulative amount of cash withdrawal by an account holder in savings account(s) during a Financial Year is about to exceed = 20 Lakh, Finacle system will throw a message to capture the TDS percentage applicable to the account holder based on his ITR filing status. The screen will be as follows.
Mode of Operation Pan Number
A. In such cases, Post Offices should process withdrawal transaction only after updating the TDS percentage of the account holder in Finacle. Post offices should follow the following procedure to capture the applicable percentage of TDS to be deducted under Section 194N and TDS deduction. (ID. Procedure to find out the percentage of TDS applicable to the account holder
The percentage of TDS to be deducted under Section 194N for an account holder is required to be obtained from the Income Tax portal.
2. The Counter PA at the post office should
i). Open the undermentioned IT Portal link using the same web browser in a separate page/Avindow or any other available web browser.
www.incometax.gov.in/iec/foportal
ii). Click on “TDS On Cash Withdrawal” option which will be available under Quick Links option as shown below.
(iii). Scroll down the Quick Links Pane and click the option ‘TDS on Cash Withdrawal’. On clicking the option, next page will be loaded as below.
iv). Enter the PAN number of the account holder and Mobile number of the person who is checking the TDS percentage. Mobile number may be either of the Counter PA or the Supervisor or the Account Holder.
(v). Click continue after entering the details. An OTP will be sent to the mobile number which has been entered.
(vi). Enter the OTP, click continue. The percentage of TDS to be deduction will appear on the screen for the entered PAN and the screen will appear as follows.
The Counter PA has to note down the same on the top of the Withdrawal form in red ink as ‘TDS Deducted on Cash WD txns @ 2% above 1C OR TDS Deducted on Cash WD txns @ 2% above 20L and @ 5% above 1C and 1D. Procedure to update TDS Percentage in Finacle
A new menu CITFM is to be used to capture TDS percentage applicable to the account holders. This menu is available for CPA work-class and Supervisor Work-class.
2. After finding the percentage of TDS applicable to the account holder, the Counter PA has to update the same for the respective CIF ID using the menu CITFM. Before updation using CITFM menu, the Counter PA should ensure that the PAN of the account holder is verified from NSDL Portal as it is mandatory for updating in CITFM MENU. Non validated PAN will not be linked in CITFM menu.
3. Counter PA should invoke CITFM menu and Select - Add function. Then, he/she should enter the CIF ID of the account holder and click on GO button.
4. PAN Number of the account holder will appear. Counter PA should check whether the PAN Number linked to CIF is same as displayed in the PAN NUMBER field.
5. Then, the Counter PA has to select the percentage of TDS applicable to the account holder, which was noted down from IT Portal. There will be two radio buttons with options
a) TDS Deducted on Cash WD txns @ 2% above 1C
b) TDS Deducted on Cash WD txns @ 2% above 20L and @ 5% above 1C
Please check the ITR status in this HTTPSJ/WiWW INCOMETAX,GOV INIEC/FOPORTAL link
Submit Cancel
6. Counter PA after the selecting the TDS Percentage which was listed in the IT Portal website should click on submit. It is the responsibility of the Counter PA to check and select the correct option of TDS percentage in the CITFM menu. Wrong capturing of TDS percentage will result in wrong calculation / deduction of TDS which will in turn affect TDS filing, corrections in the Traces portal and customers’ grievances. Hence, the Counter PA should be very careful while updating the TDS percentage.
7. Counter PA after clicking SUBMIT should confirm the same by clicking OK button. If the TDS percentage is wrongly selected, Counter PA should click on CANCEL button and modify the option of TDS percentage selected. The screen will appear as follows.
8. Then the Postmaster / Supervisor should verify the TDS percentage by invoking CITFM menu. Before verification in CITFM menu, the Supervisor should find out the TDS percentage applicable to the account holder from IT Portal, by following the procedure stated in para IJ. The Postmaster / Supervisor can use Cancel function to cancel the CITFM entry if the option selected is incorrect.
(IV). Intimation to the Depositors
A short message (SMS) will be sent to the registered mobile number of the Depositors concerned as and when the TDS is deducted under Section 194N of IT Act 1961.
(V). Other Important points
1. System will not allow Cash withdrawals beyond = 20 lakhs if CITFM entries are not available. Error message will be thrown if CITFM entry is not made for that particular CIF.
2. Entries made in CITFM are only for the current Financial Year. TDS percentage needs to be captured afresh every financial year whenever a warning message is displayed in the system for that particular customer.
3. In RICT and ATM, a Static message “Please update the ITR filing status at home branch post office if aggregate cash withdrawal exceeds 20 lakh in a financial year. If not updated, TDS will be deducted at higher rate” will be displayed. The screen shall be as follows.
A. TDS - LIEN MARKING
i). During transaction which involves 194N TDS deduction, len equivalent to TDS amount will be marked in the respective account. This len will be user defined lien and it can be viewed through HALM menu. This len cannot be modified by the user. TDS will be deducted via batch job and once deducted, Lien will be lifted by the system. TDS deduction transactions can be viewed in the TDS Detailed report after successful execution of batch job. TDS due to be recovered under section 194N for cash withdrawals happened via all channels will be marked as lien
ii). TDS len marking can also be viewed using menu HALM - user defined lien.
iii). TDS lien marked will not form part of effective balance and lien marked under 194N cannot be modified. Lien amount will be deducted as TDS when automated batch job is executed and the same will be reflected in the last column of the Section 194N TDS Deduction Detail report.
5. 194N TDS deduction on RICT / AMT Withdrawals:
In case of cash withdrawals through RICT and ATM, only a static message on 194N TDS deduction will be displayed in ATM / RICT applications. If TDS percentage is not updated in CITFM menu, higher TDS percentage at 5% will be deducted for all cash withdrawals exceeding ~ 20 lakh. Hence, the post office officials should apprise such account holders to get the TDS percentage updated every financial year.
6. Post Offices shall not perform any credit or debit transaction using CTM menu for any incorrect deposit / withdrawal transactions adjustment. In case of any wrong deposit / withdrawal, the transaction must be reversed using HCRT menu. Adjustment of wrong credit / debit using CTM menu will lead to wrong deduction of TDS under Section 194N, wrong reporting of cash transactions to IT Department in SFT-005 and thereby customer grievances.
Note: Validations have been built in CTM menu to hmit withdrawals, upto the maximum amount including 194N TDS recovery and the minimum balance. As such, in a SB account, falling under the 194N TDS purview, cash withdrawals will be limited to the maximum eligible amount (ie. effective balance minus the TDS recovery plus the liens if any and minimum balance) and the same will be calculated by the system and thrown as an information, in case the withdrawal amount is more than that of the maximum eligible amount.
Reports
1. Two reports related to TDS deduction under Section 194N are available in HFINRPT menu.
(a). Section 194N TDS Deduction Detail report
This report will detail the list of Transactions for which TDS is deducted along with Transaction details. Transaction date will be the actual date on which the withdrawal transaction occurred. TDS Trans date is the date when the batch job has been executed. This report can be generated for a day.
(b). Section 194N TDS Deduction Summary
This report will generate total TDS deducted SOL-wise. This report can be generated for SOLID / HO SET ID and for a range of dates.
