Section 194N of the Income-tax Act, 1961, imposes a tax deduction at source (TDS) on cash withdrawals exceeding certain threshold limits. For example, let’s consider a scenario where an individual withdraws cash from their savings account, and the bank is required to deduct TDS. If the individual withdraws ₹20 lakhs in a financial year from their savings account, will the bank be required to deduct TDS?
If the bank fails to deduct TDS on cash withdrawal, what will be the penalty?
The threshold limits for TDS on cash withdrawal are as follows: ₹1 crore for savings accounts, ₹50 lakhs for current accounts, and ₹20 lakhs for other types of accounts. However, there are certain exemptions available, such as withdrawals made by the Central or State Government, and withdrawals made by certain institutions, such as banks and post offices.