Tax Deducted at Source (TDS)

TDS is a tax deducted at the time income is generated, rather than at a later date. It is deducted by the payer and remitted to the government on behalf of the payee.

Why Does It Matter?

TDS matters because it ensures timely tax collection, reduces tax evasion, and spreads tax payments over time. It helps the government maintain steady revenue and allows taxpayers to claim credit or refunds when filing returns.

TDS on Cash Withdrawal?

Case 1  –  If You Filed ITR in the Last 3 Years 

If you withdraw more than ₹1 crore in cash in a financial year (from all accounts in one bank),

TDS of 2% will be deducted on the amount exceeding ₹1 crore.

Case 2  –  If You Did Not File ITR in Last 3 Years

TDS will be deducted at lower limits and higher rates:

Cash withdrawn between ₹20 lakhs and ₹1 crore → TDS @ 2%

Cash withdrawn above ₹1 crore → TDS @ 5%

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