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Tax Tips: Tax will have to be paid even on withdrawal of money kept in bank account, know how much amount can be withdrawn..

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If you are confident of withdrawing the money lying in your bank account anytime. So wait a bit. You have to plan your withdrawal of money carefully so that you avoid paying unnecessary taxes. For this, you should know how much amount can be withdrawn in a year without paying tax. The rule of paying fees for withdrawing money more than the prescribed limit is not only applicable to ATM transactions, but a similar rule is also applicable to withdrawing money from the bank. 

How much cash can be withdrawn? 

People feel that they can withdraw as much cash as they want from their bank account for free. But, under Section 194N of the Income Tax Act, if a person withdraws more than Rs 20 lakh in a financial year, he will have to pay TDS. However, this rule is only for those people who have not filed an Income Tax Return (ITR) for 3 consecutive years. Such people will have to pay TDS if they withdraw more than Rs 20 lakh from any bank, cooperative, or post office. 

Relief to those filing income tax returns 

However, those filing ITR get more relief under this rule. Such customers can withdraw cash up to Rs 1 crore in a financial year from the bank, post office, or co-operative bank account without paying TDS.

How much TDS will have to be paid? 

Under this rule, if you withdraw more than Rs 1 crore from your bank account, then TDS will be deducted at the rate of 2 percent. If you have not filed an ITR continuously for the last three years, then you will have to pay 2 percent TDS on cash withdrawals of more than Rs 20 lakh and 5 percent TDS on withdrawals of more than Rs 1 crore. 

There is already a charge on ATM transactions

Banks charge a fee for withdrawing money from ATMs more than the prescribed limit. RBI had increased the service charge for withdrawing cash from ATMs from January 1, 2022. Now banks are charging Rs 21 for transactions exceeding the prescribed limit. Earlier one had to pay Rs 20 for this. Most banks offer five free transactions every month from their ATMs. Apart from this, three transactions are also free from ATMs of other banks. However, in metro cities, you can withdraw money only three times for free from your bank.

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