Can I Get a Refund of TDS on Cash Withdrawal?
Understanding Section 194N of the Income Tax Act | FY 2024–25
If TDS was deducted when you withdrew a large sum of money from your bank account, you may be wondering:
“Can I claim a refund of TDS on cash withdrawal?”
Here’s a clear breakdown of when this TDS applies, who it affects, and whether or not it’s refundable.
📘 What Is Section 194N?
Section 194N of the Income Tax Act was introduced to discourage large cash transactions and promote digital payments. It requires banks, cooperative societies, and post offices to deduct TDS on cash withdrawals exceeding a specified limit in a financial year.
✅ When Is TDS Deducted on Cash Withdrawal?
| Status of PAN Holder | Cash Withdrawal > | TDS Rate |
| ITR filed in the last 3 years | ₹1 crore/year | 2% on excess |
| ITR not filed in the last 3 years | ₹20 lakh/year | 2% (₹20–₹1 Cr), 5% (>₹1 Cr) |
❓ Can I Get a Refund of This TDS?
✅ Yes, you can claim a refund—but only if your total tax liability for the year is less than the total TDS paid, including this deduction under Section 194N.
This TDS:
• Gets reflected in your Form 26AS and AIS
• Can be claimed like any other TDS when you file your ITR
• Will be refunded if your total income is below the taxable limit or the tax payable is lower
🧾 Example:
• Cash withdrawn: ₹1.5 crore
• TDS deducted: ₹1 lakh
• Your total income: ₹4 lakh (after deductions)
• Tax liability: ₹0 (eligible for rebate under Section 87A)
✅ You can claim the full ₹1 lakh as a refund in your ITR
🔍 How to Claim the Refund?
1. Verify TDS entry in Form 26AS or AIS under Section 194N
2. File your ITR before 31st July (if no audit required)
3. Declare all income and deductions
4. Enter the TDS amount under the “Tax Paid” section
5. E-verify your return
6. Refund will be processed by CPC Bengaluru and credited to your bank account
🛑 Important Conditions
| Condition | Status |
| PAN must be linked and valid | ✅ Yes |
| TDS will not apply for govt bodies, banks, etc. | ✅ Exempt |
| Refund applies only if TDS > Tax | ✅ Refundable |
| Form 15G/15H NOT applicable | ❌ Not allowed here |
Final Words
Yes, TDS on cash withdrawal is refundable, just like any other TDS, if your final tax liability is lower than the total tax already deducted. Ensure you file your ITR accurately and on time to claim this refund.
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