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Bank Transaction: If you are confident of withdrawing the money lying in your bank account anytime, then wait a little. You will again need to plan your withdrawal 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 For this you should know how much amount can be withdrawn in a year without paying tax.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 a fee for withdrawing more than the prescribed limit is not only applicable to ATM transactions, but the same rule is applicable to withdrawing money from the bank also.
How much cash can be withdrawn?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 who have not filed Income Tax Returns (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, under this rule, those filing ITR get more relief. Such customers can withdraw cash up to Rs 1 crore from their bank, post office or co-operative 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 percent. If you have not filed ITR continuously for the last three years, then you will have to pay 2% TDS on cash withdrawals of more than Rs 20 lakh and 5% TDS on withdrawals of more than Rs 1 crore.
ATM transactions are already charged
Banks charge for withdrawing more money from ATM than 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 exceeding the prescribed limit. Earlier one had to pay Rs 20 for this. Most banks offer five free transactions 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.