TDS on cash withdrawal exceeding ₹1 crore

Banks must deduct TDS @ 2% on CASH WITHDRAWAL exceeding ₹1 Cr in aggregate during the FY from one or more accounts of the same person. For non-ITR-filers (3-year laggards): 2% above ₹20 L and 5% above ₹1 Cr.

Key points

• §194N requires a banking company / cooperative bank / post office responsible for paying any CASH withdrawal exceeding ₹1 CRORE in the aggregate during the FY to a person from one or more of his accounts maintained with such payer, to DEDUCT INCOME TAX at 2% of the sum exceeding ₹1 crore.
• The threshold is PER PAYER (each bank counts separately).
• NON-FILERS (§194N second proviso): for any person who has not filed return of income for ALL THREE preceding AYs (for which time to file under §139(1) has expired), the threshold drops to ₹20 LAKH and: (a) 2% TDS on withdrawal between ₹20 L and ₹1 Cr;
• (b) 5% TDS on withdrawal exceeding ₹1 Cr.
• Excluded payees: government, banking companies themselves, cooperative society engaged in business of banking, post offices, white-label ATM operators, business correspondents, commission agents handling APMC cash.
• Credit allowed in the FY of TDS via Form 26AS;
• refundable if total income is below taxable.
• Reported in Form 26Q.

Reference: §194N, ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §393