ITR season for the assessment year 2023-24 is going on, and over 3 crore income tax returns have already been filed. The ITR is the final assessment of your tax liability for the preceding financial year. During the year, there are various deductions take place from your income, which get adjusted in the final ITR. There are various TDS (tax deducted at source). Among others, there is a TDS on cash withdrawal as well.
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TDS is the deduction of tax as the source itself. For example, a salaried employee gets his salary after deducting the tax applicable as per his or her tax slab.
According to Section 194N of the Income Tax Act, 1961, TDS has to be deducted if an amount withdrawn in cash by a person from his or her bank or post office account in a particular financial year exceeds:
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a) Rs 20 lakh (if no ITR has been filed for the past three assessment years)
b) Rs 1 crore (if ITRs have been filed for all or any of the previous three assessment years)
Who Deducts TDS Under Section 194N?
TDS on cash withdrawal is deducted by banks, including private, public and cooperative, or post offices.
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What Is the TDS Rate on Cash Withdrawal?
The TDS rate on cash withdrawal is 2 per cent. However, it is applicable if the withdrawal cash is above Rs 1 crore (if ITRs for all or any of the past three AYs filed) or above Rs 20 lakh (if ITRs for the previous three AYs not filed).
If the person is a cooperative society, the threshold amount of Rs 1 crore will be replaced with Rs 3 crore.
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