TDS ON CASH WITHDRAWALS...

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The Income-tax Act, 2025, mandates TDS deduction under Section 393(3) if cash withdrawals from a bank account exceed ₹1 crore in a financial year. Providing proof of filing an Income-tax Return (ITR) does not exempt account holders from this deduction. The TDS rate is 2% for regular ITR filers and 5% for non-filers on withdrawals exceeding ₹1 crore.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)

09 July 2026 Under the Income-tax Act, 2025 (effective from 1 April 2026), if the aggregate cash withdrawals from a bank account exceed ₹1 crore during the financial year, is the bank mandatorily required to deduct TDS under Section 393(3)?

Further, if the account holder has filed the Income-tax Return (ITR) and provides a copy of the filed ITR to the bank as proof of being an ITR filer, is the bank still required to deduct TDS, or can TDS be waived on that basis?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

09 July 2026 Yes, the bank is mandatorily required to deduct TDS under Section 393(3) of the Income-tax Act, 2025, and providing proof of filing an ITR will not waive this deduction.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

09 July 2026 TDS Thresholds and Rates for FY 2026-27
Account Holder Status Withdrawal Threshold TDS Rate
Regular ITR Filers (Filed returns in previous years)Exceeding ₹1 Crore 2%
Non-ITR Filers (Defaulted in filing for past 3 years)₹20 Lakh to ₹1 Crore 2%
Exceeding ₹1 Crore 5%

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