How much to deposit cash in saving account?

Gain insights into cash deposit limits in savings accounts and their relevance to income tax regulations, helping you avoid legal complications effectively from the tax expert or CA S K NAGDA & Co

Understanding the cash deposit limit in savings accounts imposed by income tax regulations is crucial to avoid legal complications.

Cash Deposit Limit in Saving Account as Per Indian Income Tax

The cash deposit limit in savings accounts refers to the maximum amount of cash that an individual can deposit in Saving bank Account within a specified period.

 This limit is set by income tax regulations to monitor and regulate the flow of cash transactions, curbing money laundering, tax evasion, and other illicit financial activities.

As per the provisions of the Indian Income Tax Act, there are specific regulations for cash transactions including for cash deposits.

Although all these deposits aren’t subject to taxation but all the financial institutions are obligated to report to the Income Tax Department about all the transactions which are in exceed  to the limit.

Cash deposit refers to either depositing money manually into account or through other modes like money transfer or ATM.  A person who withdraws the money after the deposit, then it will also be considered as cash deposit transaction 

The cash deposit limit in savings account per day is Rs.1 Lakh. A person can, however, deposit up to Rs.2,50,000 in a day as long as  the Individuals who deposit cash into a savings bank account and should not accumulate Rupees 10 lakh or more during a fiscal year.

All banks or financial institutions must declare large cash deposits according to Section 114B of the Income Tax Act, 1962.

Hence, the cash deposit limit in savings account in a financial year is Rs.10 Lakh and should not be crossed this amount. Otherwise IT department may be notified.

For those who are holding current accounts with the banks, reporting limit is to Rupees 50 lakh.

Consequences of crossing the Cash Deposit Limit in Savings Account per Month?

If anybody crosses the cash deposit limit in savings bank account, the banks will report the excess transactions to the Income Tax Department. But, all these deposits will not be taxed outright.

Points to be kept in mind:- 

• Crossing the cash deposit limit in savings account per day of Rs.2.5 Lakh for general and Rs.5 Lakh by senior citizens is considered a large deposit
• Generally for deposit of more than Rs.50,000, banks generally ask for PAN Card.
• The IT department may call for information through notice for furnishing the source of income about such deposit.
• On being unable to explain the source of income , then IT department to serve notices under Section 68 of the IT Act
• Still  a person cannot submit the prof of source of income, I. T Department would leavy tax @ 60% , 25% surcharge, and 4% cess
• The IT department may also levy penalties as per I.T. Act.

Discover the importance of understanding cash deposit limits in savings accounts to navigate income tax regulations and prevent potential legal issues from the expert udaipur Tax advisor or from CA S K NAGDA & Co.