# Section 194N — TDS on Cash Withdrawal

## Who deducts?

Bank / Co-operative Bank / Post Office paying cash to any person.

## When?

At the time of payment of cash.

## Threshold and Rate

### Case A — ITR filed in all 3 preceding PYs (Regular filer)

Withdrawal > ₹1 crore in the FY → 2% on the excess.
For co-operative society: limit raised to ₹3 crore.

### Case B — ITR NOT filed in any of last 3 PYs (Non-filer)

Withdrawal > ₹20 lakh but ≤ ₹1 crore → 2% on the excess over ₹20 lakh.
Withdrawal > ₹1 crore → 5% on the excess over ₹1 crore.

## Note

TDS is on the EXCESS withdrawal amount, not on the full amount.

Worked example

### Example 1

Example (Regular filer): Mr. R withdraws ₹1.5 crore from his savings account during FY. TDS u/s 194N = 2% × ₹50 lakh (excess over ₹1 cr) = ₹1,00,000.

### Example 2

Example (Non-filer): Mr. K (didn't file ITR last 3 years) withdraws ₹35 lakh. TDS = 2% × ₹15 lakh (excess over ₹20 L) = ₹30,000.

### Example 3

Example (Non-filer): Withdrawal ₹1.2 crore → 2% × ₹80 L + 5% × ₹20 L = ₹1,60,000 + ₹1,00,000 = ₹2,60,000.

⚠️ Common exam mistakes

Applying 194N on the full withdrawal amount — it applies only on the EXCESS.
Using ₹1 cr threshold for non-filers — non-filers' lower limit of ₹20 lakh applies.
Not applying the ₹3 crore exemption available specifically to co-operative societies.

Reference: 194N

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Section 194N — Cash Withdrawal from Bank / Post Office

Worked example

⚠️ Common exam mistakes