Cash Withdrawal Rules, Know How Much You Can Withdraw Daily Legally | Read 1hour

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.