Section 194N — TDS on
Cash Withdrawal
The current 194N rate and threshold for FY 2025-26, how banks aggregate your accounts, the higher limit for ITR filers, exemptions, and how to claim the TDS as credit in your return.
Under Section 194N, banks, co-operative banks and post offices deduct 2% TDS on cash withdrawals above Rs1 crore in a financial year if you have filed ITR in any of the last 3 years. Non-filers face a lower Rs20 lakh limit — 2% on Rs20 lakh to Rs1 crore and 5% above Rs1 crore. The limit is cumulative across all your accounts in the same bank. TDS is fully claimable as credit in your return.
Section 194N — TDS Rate & Threshold Table
The complete 194N rate and threshold matrix for FY 2025-26, split by whether you have filed your income-tax return in the last three years.
| Deductee / situation | Cash withdrawn (per bank, per FY) | TDS rate |
|---|---|---|
| ITR filed in any of last 3 FYs | Up to Rs1 crore | Nil |
| ITR filed in any of last 3 FYs | Above Rs1 crore | 2% on excess |
| ITR not filed in last 3 FYs | Up to Rs20 lakh | Nil |
| ITR not filed in last 3 FYs | Rs20 lakh to Rs1 crore | 2% on excess over Rs20L |
| ITR not filed in last 3 FYs | Above Rs1 crore | 5% on excess over Rs1Cr |
| Co-operative society (any filer status) | Above Rs3 crore | 2% / 5% as above |
TDS is on the cash withdrawal amount, not on income. Rates unchanged by Budget 2025. Co-op society threshold is Rs3 crore since 1 Apr 2023.
Section 194N — Key Details
| Feature | Details |
|---|---|
| Who deducts | Banks, co-operative banks, post offices |
| On what | Cash withdrawn (not cheque / NEFT / RTGS / UPI) |
| Effective from | 1 Sep 2019 (Rs1Cr); 1 Jul 2020 (non-filer lower limits) |
| Aggregation | All accounts of the same person in the same bank (all branches) |
| Across banks | Not aggregated — each bank has its own threshold |
| TDS certificate | Form 16A from the bank; reflects in Form 26AS / AIS |
| Claim credit | In ITR — refundable if tax liability is below TDS |
| New law reference | Renumbered to Section 393(3), Table Sl. No. 5 from AY 2026-27 |
How Banks Aggregate Your Withdrawals
The 194N threshold is cumulative and per-bank. Every cash withdrawal from all your accounts — savings, current, cash-credit, overdraft — across every branch of the same bank is added up during the financial year. Different banks are counted separately, so each bank applies its own Rs1 crore (or Rs20 lakh) threshold independently.
- Same bank, all branches & accounts: added together for the threshold.
- Bank A and Bank B: not combined — each tests its own limit.
- Digital payments (NEFT / RTGS / IMPS / UPI / cheque) do not count — only physical cash.
If you have not filed a return in any of the last three years, your TDS-free cash limit collapses from Rs1 crore to just Rs20 lakh, and withdrawals above Rs1 crore are taxed at 5% instead of 2%. Filing your ITR every year restores the higher Rs1 crore threshold and the lower 2% rate.
Who Is Exempt from Section 194N?
- Central and State Governments
- Banks (including co-operative and RRBs) and business correspondents of a bank
- White-label ATM operators
- Authorised cash-replenishment agencies / franchise agents of a bank
- Traders / commission agents of APMC mandis (notified), and other CBDT-notified persons
Withdrawing large cash for business? Get your 194N exposure and credit position reviewed.
Talk to a Tax Expert →How 194N TDS Is Computed
Take a person who withdraws Rs1.5 crore in cash from one bank in FY 2025-26. The TDS depends entirely on whether they have filed ITR in the last three years.
Filer — ITR filed in last 3 yrs
Non-filer — no ITR in 3 yrs
Same Rs1.5 crore withdrawal, but the non-filer pays over four times the TDS — a direct cost of not filing returns.
Claiming 194N TDS as Credit in Your ITR
Section 194N TDS is deducted on the cash you withdraw, not on income — the money is presumably from funds already taxed. So for most people the TDS simply becomes a credit that reduces tax payable or is refunded.
- Check the TDS in your Form 26AS / AIS
- Match it against Form 16A from the bank
- Report it in the TDS schedule of your ITR
- Adjust it against your tax liability
- Claim a refund if TDS exceeds the tax due
194N TDS cannot be treated as an expense or carried forward like business tax — it is a pre-paid tax credit. Because the withdrawal itself is not income, filing your ITR is usually the only way to recover it, and non-filers with 194N deductions often forfeit refunds simply by not filing.
194N TDS showing in your Form 26AS? Let us file your ITR and claim the refund.
File My ITR →Frequently Asked Questions
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