TDS · Section 194N · FY 2026–27
Section 194N: TDS on Cash Withdrawals
Section 194N (TDS on Cash Withdrawals): the TDS rate is 2% above Rs. 1 crore (non-filers: from Rs. 20L, up to 5%). Threshold: Rs. 1 crore per financial year per bank (Rs. 20 lakh for ITR non-filers).
Section 194N applies TDS on aggregate cash withdrawals above Rs. 1 crore per financial year from one bank. Higher rates apply for taxpayers who have not filed ITR for 3 consecutive years.
Rate source: Income Tax Department TDS rate chart
2%
2% above Rs. 1 crore (non-filers: from Rs. 20L, up to 5%)
Threshold
₹1 crore a year
Who deducts
Banks, post offices, and cooperative banks.
No PAN
20%
Shows up in
Form 26AS & AIS, quarterly
What it looks like on a real payment
Worked exampleSec 194N
Amount payable to you₹1,50,00,000
TDS @ 2%− ₹1,00,000
You receive₹1,49,00,000
The ₹1,00,000 is not lost — it is pre-paid tax, credited in your 26AS and adjusted at filing.
2% applies on the amount above Rs. 1 crore: a Rs. 1.5 crore withdrawal has Rs. 50 lakh in excess, and 2% of that is Rs. 1,00,000.
Run your own numbersFree 194N calculator — invoice amount in, deduction and take-home out. No signup.What this means for you
194N TDS is creditable at ITR like any other deduction — but the cleanest move is to avoid triggering it by filing returns and using bank transfers / UPI instead of large cash withdrawals.
194N is a banking deduction on aggregate cash withdrawals above Rs. 1 crore/year from one bank (Rs. 20 lakh if you have not filed ITR for the last 3 years). Most freelancers never hit Rs. 1 crore in cash — but if you have not been filing returns the threshold drops sharply and 2 to 5% is withheld. The fix is simply to file your ITRs on time.
When your client must deposit it — and report it
The client must deposit TDS by the 7th of the month after deduction (30 April for March). It reaches your 26AS only after they file the quarterly TDS statement (Form 26Q), due on these dates — which is why a deduction in March can be invisible until 31 May:
Form 26Q · quarterlyFY 2026–27
Q1 — Apr to Jun31 July
Q2 — Jul to Sep31 October
Q3 — Oct to Dec31 January
Q4 — Jan to Mar31 May
FAQ
What is the TDS rate under Section 194N?
Who deducts TDS under Section 194N?
What is the threshold for Section 194N TDS?
Is TDS under Section 194N deducted on the GST-inclusive amount?
How do I claim TDS deducted under Section 194N in my ITR?
Not sure how to claim this TDS back? Read the freelancer’s guide to TDS deducted by clients — how it lands in your 26AS and how you reclaim it in your ITR.
For the CA reading this
The deadline sheet you already send, with your name on it
Every statutory date for the month — GST returns, advance tax, and the dates your client's own customers owe them: when the TDS they withheld must reach the department, and when the certificate is due. Add your firm's name and forward it as it stands. No signup, no email, nothing to accept.
The image is the one that travels on WhatsApp. Dates are statutory, not advice — the sheet says which rows bind whom.
Sources
Rates as notified for FY 2026–27 and can change. General information, not tax advice. Verify with your CA before you file.
Every deduction, tracked to the rupee
Your TDS credits, never lost.
HourSlip logs the expected deduction on every invoice and reconciles it against 26AS — so filing season has no surprises.
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