Income Tax Act, 1961 Compliance

TDS on Cash Withdrawal Calculator (Section 194N)

Determine exact bank TDS deductions on cash withdrawals under Section 194N. Computes statutory slabs for compliant taxpayers (₹1 Cr threshold), non-filers (₹20 Lakh and ₹1 Cr slabs with 5% rate), co-operative societies (₹3 Cr limit under Finance Act 2023), and APMC trader exemptions.

Quick Presets & Scenarios

Taxpayer & Cash Withdrawal Details

Configure taxpayer category, return filing history, and withdrawal amounts.

Entity Category

Select legal entity classification governing the statutory threshold.

ITR Filing Compliance Status

Compliant Filer (Filed ITR for ≥1 of last 3 AYs)

Standard ₹1 Crore threshold (₹3 Cr for Co-ops). Flat 2% above threshold.

Non-Filer (No ITR for all 3 preceding AYs)

Reduced ₹20 Lakh threshold. 2% from ₹20L-₹1Cr, escalated 5% above ₹1Cr.

Based on return filing history for the preceding 3 Assessment Years.

Prior Cash Withdrawn in Current FY (₹)

₹

Aggregate cash already withdrawn across all accounts in this bank this financial year.

Current Cash Withdrawal Amount (₹)

₹

Amount of cash being withdrawn in this banking counter / cheque / ATM transaction.

Statutory StatusCompliant Filer (2% Slab)

Standard ₹1 Crore non-taxable threshold applies. 2% TDS is deducted on aggregate withdrawals exceeding this amount.

TDS Calculation & Net Cash Payout

TDS to be Deducted₹40,000.00

Gross Withdrawal Requested: ₹40,00,000.00
Net Cash Disbursed: ₹39,60,000.00
Remaining Tax-Free Headroom: ₹0.00

Effective TDS Rate:1.00%

Current Withdrawal Slab Breakdown

Statutory Slab	TDS Rate	Amount in Slab	TDS Deducted
Up to ₹1 Crore (Exempt Slab)	0%	₹20,00,000.00	₹0.00
Above ₹1 Crore (2% TDS)	2%	₹20,00,000.00	₹40,000.00

Financial Year Cumulative Position (Same Bank)

Prior FY Withdrawals₹80,00,000.00

Total Cumulative Withdrawals₹1,20,00,000.00

TDS Deducted on Prior Withdrawals₹0.00

Total TDS Deducted (YTD)₹40,000.00

Key Statutory Compliance Notes & Advisory

•Credit Available in ITR: TDS deducted under Section 194N is not an expense. Under Section 198, it is deemed as income received, and 100% credit can be claimed against your income tax liability or refunded upon filing your ITR.
•Same-Bank PAN Aggregation: The statutory threshold applies to aggregate cash withdrawals across ALL current, savings, and overdraft/cash-credit accounts held under the same PAN within this banking institution.
•Multiple Bank Independence: Each banking institution tracks its threshold independently. However, all cash transactions are reported to the Income Tax Department and appear in your AIS/26AS.
•No Cash Deposit Netting: Cash deposited during the financial year cannot be netted off or subtracted from cash withdrawals for Section 194N calculations.
•No Lower Deduction Certificate: Lower/Nil deduction certificates under Section 197 and Forms 15G/15H are NOT applicable to Section 194N cash withdrawals.
•TDS Deduction of ₹40,000 will be withheld by the cashier/bank system from your gross withdrawal of ₹40,00,000, disbursing net cash of ₹39,60,000.

How it works

Under Section 194N of the Income Tax Act, 1961 (introduced by Finance No. 2 Act 2019 and revised w.e.f. July 1, 2020), every banking company, co-operative bank, or post office must deduct tax at source (TDS) on cash withdrawals exceeding statutory limits: 1. Compliant Taxpayers (Filed ITR in any of the preceding 3 Assessment Years): • Aggregate cash withdrawals up to ₹1 Crore: NIL (0%) • Cash withdrawals exceeding ₹1 Crore: 2% on the excess amount over ₹1 Crore. 2. Non-Filers (Default in filing ITR for all 3 preceding Assessment Years where due date expired): • Up to ₹20 Lakh: NIL (0%) • Exceeding ₹20 Lakh up to ₹1 Crore: 2% on the amount between ₹20 Lakh and ₹1 Crore. • Exceeding ₹1 Crore: 5% on the amount exceeding ₹1 Crore (in addition to 2% on the ₹20L to ₹1Cr slice). 3. Co-operative Societies (Finance Act 2023 w.e.f. AY 2023-24): • Enhanced non-taxable threshold of ₹3 Crore (instead of ₹1 Crore) for compliant co-operative societies. • 2% TDS on cash withdrawals exceeding ₹3 Crore. 4. Excluded / Exempt Entities (CBDT Notifications 68/2019 & 70/2019): • Central & State Governments, Banking Companies, Co-operative Banks, and Post Offices. • Business Correspondents (BC) and White Label ATM operators. • APMC commission agents / traders withdrawing cash to pay farmers for agricultural produce upon submission of an annual declaration. • Full-Fledged Money Changers (FFMC) licensed by the Reserve Bank of India (RBI). All limits apply to the cumulative aggregate cash withdrawals across ALL current, savings, and cash credit accounts held under the same PAN within that specific banking institution during the financial year.

Example

Example: A partnership firm has already withdrawn ₹90,00,000 cash this financial year and needs to withdraw another ₹25,00,000. • Cumulative total = ₹1,15,00,000 (crosses ₹1 Crore by ₹15,00,000). • As a compliant ITR filer, the first ₹10,00,000 of the current withdrawal falls within the ₹1 Crore limit (0% TDS). • The remaining ₹15,00,000 is taxed at 2% = ₹30,000 TDS. • Net cash disbursed by the cashier = ₹25,00,000 - ₹30,00,000 = ₹24,70,000. • The ₹30,000 TDS is credited to Form 26AS/AIS and can be claimed as a tax credit or refunded in the firm's annual ITR under Section 198.

Frequently asked questions

What is Section 194N of the Income Tax Act?

Section 194N was enacted to disincentivize large cash transactions and encourage digital payments in the Indian economy. It mandates that banks, co-operative banks, and post offices deduct tax at source (TDS) at 2% or 5% whenever cumulative cash withdrawals by a person during a financial year cross ₹20 Lakh (for non-filers) or ₹1 Crore (for regular filers).

How does the bank know whether I am a compliant filer or non-filer?

The Income Tax Department provides an automated verification utility API to all scheduled commercial and co-operative banks. By entering the customer's PAN, the bank's core banking system (CBS) automatically fetches whether the person has filed returns for the past 3 Assessment Years and applies the 2% or 5% rate accordingly.

Can cash deposits be adjusted or netted against cash withdrawals?

No. The Central Board of Direct Taxes (CBDT) has clarified that Section 194N applies strictly to gross cash withdrawals. Depositing ₹2 Crore cash and withdrawing ₹1.2 Crore cash does not exempt the withdrawal. The bank will deduct 2% TDS on the ₹20 Lakh gross withdrawal exceeding ₹1 Crore.

Does the ₹1 Crore limit apply separately to each bank or across all banks combined?

Each banking institution calculates the threshold independently for all accounts (current, savings, OD/CC) held with it under the same PAN. Withdrawing ₹80 Lakh from State Bank of India and ₹60 Lakh from HDFC Bank will not trigger TDS at either bank counter. However, both transactions are reported to the tax department via SFT (Statement of Financial Transactions) and appear in your AIS.

Is Section 194N TDS refundable, and can I submit Form 15G/15H or Section 197 certificate?

Yes, Section 194N TDS is 100% adjustable against your final income tax liability when you file your annual ITR, and any excess can be claimed as a refund under Section 198. However, lower or nil deduction certificates under Section 197 and Forms 15G/15H are NOT legally permitted for Section 194N.

What is the special threshold for Co-operative Societies under Finance Act 2023?

Recognizing that rural and agricultural co-operatives handle massive seasonal cash disbursements to farmers and members, the Finance Act 2023 amended the second proviso of Section 194N to raise the tax-free cash withdrawal threshold from ₹1 Crore to ₹3 Crore for co-operative societies w.e.f. 1st April 2023.