Many bank customers often wonder how much cash they can
withdraw in a single day without violating income tax rules. The Income Tax
Department of India has set clear guidelines regarding cash transactions to
prevent black money, money laundering, and tax evasion. With the growing focus
on digital payments, these cash withdrawal rules have become even more relevant
today.
According to the latest Income Tax regulations,
individuals are free to withdraw cash from banks or ATMs, but limits apply
depending on the mode of transaction and the type of account. Most banks impose
daily ATM withdrawal limits ranging from ₹20,000 to ₹50,000 for savings
accounts and up to ₹1 lakh for premium accounts. However, when it comes to
larger cash withdrawals from bank branches, income tax norms come into play.
Under Section 194N of the Income Tax Act, any
individual or company withdrawing more than ₹1 crore in cash from a bank,
cooperative bank, or post office during a financial year must pay TDS (Tax
Deducted at Source) at 2%.
For those who have not filed their income tax returns for
the last three years, the limits are much lower. In such cases, a TDS of 2%
applies if cash withdrawal exceeds ₹20 lakh, and 5% applies if it
exceeds ₹1 crore in a financial year. These rules are designed to promote
transparency and encourage digital transactions.
Apart from this, the government discourages large cash
dealings in other ways. For example, under Section 269ST, receiving
₹2 lakh or more in cash from a single person in one day, for one transaction,
or for a transaction relating to one event is prohibited. Violating this rule
can lead to a penalty equal to the amount received.
Banks have also been instructed to report high-value cash
transactions to the Income Tax Department. This includes any cash
deposits or withdrawals of ₹10 lakh or more in savings accounts during a
financial year. Similarly, if you deposit or withdraw ₹50 lakh or more
from a current account, it is reported automatically through the Annual
Information Return (AIR) system.
Experts advise individuals to maintain proper records for
all major cash withdrawals and deposits. Using digital modes like UPI, net
banking, and debit cards not only ensures convenience but also reduces the risk
of scrutiny from tax authorities.
To summarize, there is no fixed daily withdrawal limit
enforced by the Income Tax Department, but certain thresholds trigger TDS and
reporting obligations. It is always safer to withdraw within banking limits and
use digital options for high-value transactions.
Staying updated with the latest Income Tax cash
transaction rules can help individuals avoid penalties and ensure financial
transparency.
