Savings Account Rules, ATM withdrawal charges, and TDS on bank transactions. Discover tips to avoid unnecessary fees and taxes on your withdrawals.
If you hold a savings account and frequently withdraw money, it’s important to be aware that certain withdrawals may incur taxes. However, this article will guide you through key information to help minimize or avoid these charges. Let’s dive into the details.
Why Banks are Essential for Savings
Banks provide a secure place to store money and safeguard it from theft. Most individuals deposit their savings in banks to meet future financial needs. However, many are unaware that withdrawing cash from a bank or ATM may involve certain taxes or charges. If you frequently withdraw cash, understanding these rules is crucial. Let’s discuss them in more detail.
ATM Transaction Charges
Did you know that withdrawing money from an ATM incurs a charge? Since January 1, 2022, banks have increased these fees. Initially, the charge for transactions exceeding five per month was ₹20 per transaction; it is now ₹21. Account holders are allowed up to five free ATM transactions per month with their home bank, after which additional charges apply.
Contrary to popular belief, withdrawing cash directly from a bank branch isn’t always free either. Many individuals unknowingly lose money due to hidden charges, as banking services are rarely entirely free. Most transactions, whether at an ATM or a branch, are subject to fees.
When is TDS Deducted on Transactions?
According to Section 194N of the Income Tax Act, Tax Deducted at Source (TDS) applies to annual cash withdrawals exceeding ₹20 lakh from a bank account. This rule is specifically for individuals who have not filed their Income Tax Returns (ITR) for the past three years. For such individuals, TDS is deducted on transactions above ₹20 lakh from any bank account.
By staying informed about these rules and charges, you can better manage your finances and avoid unnecessary losses.