The 60-second version
Returning NRIs often switch to resident savings and withdraw cash for property or family expenses. Section 194N TDS hits high cash users even when the underlying income was already taxed.
Cash TDS is not income tax
Section 194N requires banks to deduct TDS on cash withdrawals above thresholds. It is adjustable against your total tax in the ITR — not an extra permanent tax if you already owe less.
If you did not file ITR for the prior three years where due, a lower threshold (₹20 lakh) and higher rate may apply — painful for returnees who skipped filing while NRI.
I prefer account-to-account transfers over suitcase cash for property deposits.
Wire to NRO repatriation instead of cash when moving money abroad.
194N rate matrix (simplified)
| Withdrawal FY total | ITR filed on time? | TDS rate on excess |
|---|---|---|
| Up to ₹1 crore | Yes | Nil |
| Above ₹1 crore | Yes | 2% on excess over ₹1 crore |
| Above ₹20 lakh | No (3 prior years) | 2% from first rupee over ₹20 lakh |
| Above ₹1 crore | No | 5% on excess over ₹1 crore |
Avoid surprise 194N
File pending ITRs
Clear three-year non-filing flag before large withdrawals.
Use digital transfers
RTGS/NEFT for property instead of cash.
Track cumulative cash
Bank counts all branch + ATM withdrawals.
Claim TDS in ITR
Form 26AS shows 194N credit.
Plan property payments
DD and banker cheque still beat cash stacks.
Cash vs digital
High-cash event checklist
- ITR filed for prior 3 years.
- 26AS checked for 194N entries.
- Builder payment via bank transfer.
- PAN linked to all accounts.
- Cash need documented for audit trail.
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Returning NRI ITR gap
Many NRIs never filed India ITR while abroad. That triggers the harsh 194N tier when you finally withdraw cash as resident.
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Does 194N apply to NRO withdrawals?
Applies to cash withdrawal from bank accounts — including NRO if cash taken in India.
Is 194N refundable?
Yes, if total tax liability is lower than TDS credited.
Do ATMs count?
Yes — cumulative cash across channels.
Senior citizen exemption?
Lower threshold for non-filers includes seniors — file ITR to restore higher limit.
Cash deposit limits?
Separate from 194N — see PAN reporting rules for deposits.
194N vs 194IA?
194IA is property buyer TDS; 194N is bank cash withdrawal TDS.
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