There are some changes happening to the way banks and ATMs will operate in the coming years, and as a result, you may see a few new changes in the form of some additional charges and limits on your statements. The new Bank Withdrawal Rules for 2026 will impact the way the majority of users will interact with their banks. There will be some routine changes with the use of ATMs and changes related to tax and cash compliance. We here at Pushwiki have surveyed the changes and compiled what we think is necessary for you to know.
1. Increased ATM Charges
With the new Bank Withdrawal Rules for 2026, the most significant increase will be to the charges associated with Bank ATM transactions. Starting May 1, 2025, and extending into 2026, the Reserve Bank of India has authorized the increase of ATM transaction costs to ₹23 (previously ₹21) to cover an increase to the security costs and the bank’s transactional costs.
2. Changes to Free ATM Transaction Limits
There are no significant changes to the limits of free transactions, but it may be helpful to know what the free limits will be:
It is important to note that these free transaction limits will cover both financial (cash withdrawal) and non-financial (balance inquiry, mini statement) transactions.
3. Free Limits Applicable on UPI Cash Withdrawals From 2026
One of the important changes from the New Bank Withdrawal Rules of 2026 is that from April 1, 2026, all UPI cash withdrawal transactions at ATMs will be counted within the free limit for that month. Previously, users enjoyed the benefit of UPI cash withdrawal at ATMs without it affecting the free limit for card-based cash withdrawals. Users availing this benefit will now face restrictions. Several major banks, including HDFC, SBI, PNB, YES Bank, and Axis Bank, have revised their limits on free transactions and daily cash withdrawal limits as part of this change.
4. Clearer Refund Timelines for Failed Transactions
From the April 2026 update, if an ATM debits your account after failing to dispense the cash, banks will be answerable to clearer and stricter timelines for refunds. Customers will now have better protection and a more prompt resolution as it will no longer be as cumbersome as it has been in the past.
5. New PAN Requirement for Large Cash Transactions
An additional important aspect of the new bank withdrawal rules for 2026, separate from the ATM-specific norms, derives from the Income Tax Act of 2025 and the Draft 2026 Income Tax Rules. Though this aspect focuses on the tracking of large cash deposits and withdrawals, it specifically states:
- PAN will now be collected if the aggregate cash deposited or withdrawn from all bank accounts exceeds ₹10 Lakhs in a financial year.
- This new rule is a relaxation of the previous rule, which was triggered by a single cash deposit of ₹50,000 made on any given day. The new rule is therefore more user-friendly for day-to-day banking, while it also takes care of monitoring large-value banking activities.
6. TDS on Large Cash Withdrawals
Tax Deducted at Source (TDS) also applies to large cash withdrawals. The applicable rate of TDS is dependent on the cash withdrawal and the bank account holder’s return filing status.
- A 2% rate of TDS is applicable to cash withdrawals greater than ₹1 Crore in a financial year, provided the account holder is a regular return filer.
- For non-filers of the requisite income tax returns, the thresholds and the applicable rates are different, and are generally more stringent.
7. Enhanced Reporting to the Income Tax Department
Banks have now been mandated to report specified high-value transactions to the Income Tax Department via the Statement of Financial Transactions (SFT). The reported transactions are reflected in your Annual Information Statement (AIS) and, therefore, to avoid any unwarranted attention, it is prudent that you ensure the large cash withdrawals or deposits are in accordance with the income declared in your Income Tax Return (ITR).
What This Means for You
The new bank withdrawal rules 2026 will have the following practical implications based on how you typically bank:
- ATM Users: The latest rules include UPI withdrawals as part of the ATM transaction limit, meaning you will need to be more mindful of your limit and will have to pay a fee of ₹23, if you exceed the limit.
- Business Owners and Account Holders with High Balances: It is now even more important that your PAN information is current and that your large cash withdrawals correspond with your declared income, as the reporting to the tax authorities has become more stringent.
- Basic Savers: Assuming you stay below the ₹10 lakh transaction limit and within your ATM withdrawal limits, most of these rules won’t have much impact on you. However, it is a good idea to review your bank’s schedule of fees, as several banks have implemented changes that exceed the RBI baseline.
Final Thoughts
The 2026 rules on bank withdrawals have several changes, some that are minor (such as a ₹2 increase to ATMs), and some that are more substantial (such as UPI withdrawals now counting toward ATM transaction limits and changes to the PAN requirements for large transactions). While these changes are incremental, they represent a significant change to India’s digital banking system and improving consumer protections.
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