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Bank Transactions: If you are confident of withdrawing the money lying in your bank account anytime, then wait a bit. You will have to plan the withdrawal carefully again so that you can avoid paying unnecessary taxes. For this, you should know how much money can be withdrawn in a year without paying taxes. The rule of paying charges for withdrawing money beyond the prescribed limit is not only applicable to ATM transactions, but a similar rule applies to withdrawing money from the bank as well.
How much cash can be withdrawn?
People think 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 who have not filed 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 who file ITR under this rule get more relief. Such customers can withdraw up to Rs 1 crore in cash from their bank, post office or cooperative bank account in a financial year 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, TDS will be deducted at the rate of 2%. If you have not filed ITR continuously for the last three years, then you will have to pay 2% TDS on cash withdrawal of more than Rs 20 lakh and 5% TDS on withdrawal of more than Rs 1 crore.
ATM transactions are already charged
Banks charge a fee for withdrawing money from ATM beyond the prescribed limit. RBI had increased the service charge on withdrawing cash from ATM from January 1, 2022. Now banks are charging Rs 21 for transactions above the prescribed limit. Earlier one had to pay Rs 20 for this. Most banks offer five transactions free every month from their ATMs. Also, three transactions are free from ATMs of other banks. However, in metro cities you can withdraw money from your bank only three times for free.