Section 194N — TDS on Cash Withdrawal from Bank

Q: What is Section 194N and when does TDS apply on cash withdrawal?

Section 194N requires banks, cooperative banks, and post offices to deduct TDS on cash withdrawals. TDS at 2% applies when: Cash withdrawn by a person from one or more accounts exceeds ₹1 crore in a financial year (for those who have filed ITR in any of the past 3 years). TDS at 2% starts from ₹1 crore; 5% TDS if the person has NOT filed ITR in past 3 years (for withdrawals between ₹20L-₹1Cr). For non-ITR filers: 2% on ₹20L-₹1Cr + 5% on amounts exceeding ₹1Cr. The threshold is cumulative across ALL accounts in ALL branches of the bank.

Q: What is the TDS rate under Section 194N for non-ITR filers?

For non-ITR filers (did not file ITR in any of past 3 FYs): 2% TDS on cash withdrawal between ₹20 lakh and ₹1 crore; 5% TDS on cash withdrawal above ₹1 crore. For ITR filers: No TDS on first ₹1 crore; 2% TDS on amount above ₹1 crore. The bank checks ITR filing status via PAN linkage with the income tax department. If you have filed ITR at least once in past 3 years: you get the higher ₹1Cr threshold. Pro tip: File ITR every year to maintain the higher threshold and avoid 2-5% TDS on large cash withdrawals.

Q: Can the TDS under Section 194N be claimed as credit?

Yes. TDS deducted under Section 194N is credited to your account and reflects in Form 26AS. You can claim it as TDS credit while filing your ITR. If total tax liability is less than TDS deducted, the balance is refunded. Important distinction: Section 194N TDS is on the CASH WITHDRAWAL, not on income — so it is not an income tax on the withdrawal amount itself. The cash withdrawn is presumably from income already taxed. The TDS serves as a compliance mechanism to track large cash transactions. For most taxpayers, this TDS will result in a refund since the withdrawal itself is not additional income.

Q: Are all withdrawals aggregated or per-account for Section 194N?

Aggregation: All cash withdrawals from ALL accounts of the same person in the SAME bank (including all branches) are aggregated. Separate banks are not aggregated — ₹1Cr from Bank A and ₹1Cr from Bank B means TDS applies at each bank separately when their individual threshold is crossed. Types of accounts included: Savings, current, fixed deposit (on maturity withdrawal), recurring deposit, cash credit accounts. Exemptions: Government accounts, certain banking entities, white-label ATM operators, India Post payment bank, NABARD etc. are exempt from 194N TDS deduction.

Q: How to avoid or reduce TDS under Section 194N?

Legitimate ways to reduce 194N TDS impact: (1) File ITR every year — ensures ₹1Cr threshold (vs ₹20L for non-filers); (2) Use digital payments instead of cash — NEFT/RTGS/UPI don't trigger 194N; (3) Get certificate from AO under Section 197 for lower/nil TDS if your income doesn't warrant the TDS; (4) Spread withdrawals across different banks (not the same bank — each bank has separate threshold); (5) Claim TDS credit in ITR for refund. Note: 194N was introduced to discourage large cash transactions in the economy and encourage digital payments — it's a compliance tool, not a punitive tax.

Updated: 3 June 2026 | Income-tax Act 2025 | Effective FY 2019-20

Section 194N: Banks deduct 2% TDS when cash withdrawals exceed ₹1 crore in a year (for ITR filers). Non-filers: 2% from ₹20L, 5% above ₹1Cr. Threshold is cumulative across all accounts in the same bank. TDS is claimable as credit in ITR.

₹1 Cr

ITR filers: No TDS on first ₹1 crore cash withdrawal per bank per year.
Non-filers get only ₹20L threshold. File ITR every year to maintain the ₹1Cr exemption.

Section 194N — TDS Rate Table

Taxpayer Category	Cash Withdrawal Amount	TDS Rate
ITR filed in any of past 3 FYs	Up to ₹1 crore	Nil
ITR filed in any of past 3 FYs	Above ₹1 crore	2% on excess over ₹1Cr
ITR NOT filed in past 3 FYs	Up to ₹20 lakh	Nil
	₹20L to ₹1 crore	2% on amount ₹20L-₹1Cr
	Above ₹1 crore	5% on excess over ₹1Cr

Section 194N — Key Details

Feature	Details
Who deducts	Banks, cooperative banks, post offices
Effective from	1 September 2019 (₹1Cr threshold); April 2020 (non-filer lower threshold)
Aggregation	All accounts in same bank (all branches combined)
Cross-bank	NOT aggregated — each bank has independent threshold
TDS certificate	Form 16A issued by bank; reflects in Form 26AS
Claim credit	In ITR — can get refund if tax liability < TDS
Exempt entities	Govt departments, banking companies, white-label ATM operators, India Post

Frequently Asked Questions

What is Section 194N and when does TDS apply on cash withdrawal?

Section 194N requires banks, cooperative banks, and post offices to deduct TDS on cash withdrawals. TDS at 2% applies when: Cash withdrawn by a person from one or more accounts exceeds ₹1 crore in a financial year (for those who have filed ITR in any of the past 3 years). TDS at 2% starts from ₹1 crore; 5% TDS if the person has NOT filed ITR in past 3 years (for withdrawals between ₹20L-₹1Cr). For non-ITR filers: 2% on ₹20L-₹1Cr + 5% on amounts exceeding ₹1Cr. The threshold is cumulative across ALL accounts in ALL branches of the bank.

What is the TDS rate under Section 194N for non-ITR filers?

For non-ITR filers (did not file ITR in any of past 3 FYs): 2% TDS on cash withdrawal between ₹20 lakh and ₹1 crore; 5% TDS on cash withdrawal above ₹1 crore. For ITR filers: No TDS on first ₹1 crore; 2% TDS on amount above ₹1 crore. The bank checks ITR filing status via PAN linkage with the income tax department. If you have filed ITR at least once in past 3 years: you get the higher ₹1Cr threshold. Pro tip: File ITR every year to maintain the higher threshold and avoid 2-5% TDS on large cash withdrawals.

Can the TDS under Section 194N be claimed as credit?

Yes. TDS deducted under Section 194N is credited to your account and reflects in Form 26AS. You can claim it as TDS credit while filing your ITR. If total tax liability is less than TDS deducted, the balance is refunded. Important distinction: Section 194N TDS is on the CASH WITHDRAWAL, not on income — so it is not an income tax on the withdrawal amount itself. The cash withdrawn is presumably from income already taxed. The TDS serves as a compliance mechanism to track large cash transactions. For most taxpayers, this TDS will result in a refund since the withdrawal itself is not additional income.

Are all withdrawals aggregated or per-account for Section 194N?

Aggregation: All cash withdrawals from ALL accounts of the same person in the SAME bank (including all branches) are aggregated. Separate banks are not aggregated — ₹1Cr from Bank A and ₹1Cr from Bank B means TDS applies at each bank separately when their individual threshold is crossed. Types of accounts included: Savings, current, fixed deposit (on maturity withdrawal), recurring deposit, cash credit accounts. Exemptions: Government accounts, certain banking entities, white-label ATM operators, India Post payment bank, NABARD etc. are exempt from 194N TDS deduction.

How to avoid or reduce TDS under Section 194N?

Legitimate ways to reduce 194N TDS impact: (1) File ITR every year — ensures ₹1Cr threshold (vs ₹20L for non-filers); (2) Use digital payments instead of cash — NEFT/RTGS/UPI don't trigger 194N; (3) Get certificate from AO under Section 197 for lower/nil TDS if your income doesn't warrant the TDS; (4) Spread withdrawals across different banks (not the same bank — each bank has separate threshold); (5) Claim TDS credit in ITR for refund. Note: 194N was introduced to discourage large cash transactions in the economy and encourage digital payments — it's a compliance tool, not a punitive tax.

TDS Return Filing Section 206C TCS Form 26AS File ITR TDS Refund ITR Due Dates

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Section 194N — TDS on Cash Withdrawal from Bank

Section 194N — TDS Rate Table

Section 194N — Key Details

Frequently Asked Questions

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