TDS on Cash Withdrawals from April 2026: New Rules & Limits Explained

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1. What is the new section for TDS on cash withdrawal from April 2026?
Under the New Income Tax Act 2025, the provisions previously under Section 194N are moved to Section 393. These rules apply to withdrawals from Banks (Private, Public, and Co-operative) and Post Offices.
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2. What is the TDS limit for a person who regularly files Income Tax Returns (ITR)?
For individuals or entities who have filed their ITR for the last three assessment years: Up to ₹1 Crore: No TDS. Above ₹1 Crore: 2% TDS on the amount exceeding ₹1 Crore.
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3. What are the rules for “Non-Filers” (those who haven’t filed ITR for 3 years)?
If you have not filed ITR for the previous three assessment years, the limits are stricter: ₹20 Lakh to ₹1 Crore: 2% TDS on the amount exceeding ₹20 Lakh. Above ₹1 Crore: 5% TDS on the amount exceeding ₹1 Crore.
4. Is there a special limit for Co-operative Societies?
Yes. To support rural and agricultural sectors, Co-operative Societies can withdraw up to ₹3 Crore in a financial year without any TDS. A 2% TDS applies only on withdrawals exceeding this amount.
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5. Does the limit apply per account or per bank?
The limit applies per bank. If you have three different accounts (e.g., Savings, Current, and Overdraft) in the same bank, the withdrawals from all three will be aggregated. However, if you have accounts in three different banks, each bank will track the ₹1 Crore (or ₹20 Lakh) limit separately.
6. Is this TDS a final tax? Can I get a refund?
No, it is not a final tax. It is a “Tax Deducted at Source.” You can claim credit for this TDS while filing your Income Tax Return. If your total tax liability is less than the TDS deducted, you will receive a refund.
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7. Are there any exemptions to these rules?
Yes, TDS under this section does not apply to withdrawals made by: The Government. Banking companies or Co-operative banks. Post Offices. Business Correspondents (BCs) of a bank. White Label ATM operators.
8. What happens if I don’t provide my PAN?
If a valid PAN is not provided to the bank, the TDS rate can jump to a much higher flat rate (usually 20%) regardless of the thresholds mentioned above.
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