If your total cash withdrawal in a year across all bank accounts exceeds Rs 1 crore, then a 2 percent tax deduction at source (TDS) will be levied against any amount above Rs 1 crore. The new rules came into effect September 1 following the amendment of Income-Tax Act.
The cash withdrawal limit for the ongoing financial year will be considered from April 1, 2019. However, if you have withdrawn Rs 1 crore before September 1, then the TDS will be charged on any subsequent cash withdrawals.
Several entities are exempt from the new taxation rules, including the government, institutions engaged in carrying on the business of banking or a post office, business correspondent of a banking company or co-operative society engaged in carrying on the business of banking, any white label automated teller machine (ATM) operator of a banking company or co-operative society engaged in carrying on the business of banking, in accordance with the authorization issued by the Reserve Bank of India (RBI), and the people getting exemptions from the government.
The new taxation rules are in line with the government’s efforts to increase cashless transactions
and reduce reliance on physical currency.