Income Tax News: Depositing More Than THIS Much in Your Savings Account Can Lead You in Trouble, Check Rules

Income Tax News: In a bid to curb black money and expand the tax base, the Indian government has enforced strict reporting requirements for banks, corporates, post offices, and non-banking financial companies (NBFCs) regarding high-value transactions in savings accounts. While there is no limit on how much money can be deposited into or withdrawn from a savings account, crossing certain thresholds could attract scrutiny from tax authorities.

Depositing More Than THIS Much in Your Savings Account Can Lead You in Trouble

According to tax experts, including Aarti Raote, Partner at Deloitte, banking institutions are required to submit a Statement of Financial Transactions (SFT) for cash deposits and withdrawals exceeding ₹10 lakh in a financial year. This applies to all savings accounts (excluding current and time deposit accounts) across one or more accounts held by a taxpayer.

"The ₹10 lakh limit is aggregated for both deposits and withdrawals, allowing tax officers to investigate the source of funds and determine whether appropriate taxes have been paid," Raote explains. The government’s initiative to monitor large transactions helps ensure compliance and prevent tax evasion.

Reporting Applies to Various Financial Activities

The SFT reporting requirements extend beyond just savings account transactions. Investments in shares, debentures, time deposits, mutual funds, credit card expenses, foreign exchange purchases, and transactions involving immovable property are also covered under the regulations. Financial institutions are responsible for reporting such activities to the tax department if they surpass the specified limits, enabling authorities to keep a close watch on high-value financial activities.

By tightening these rules, the government aims to promote transparency and ensure that taxpayers disclose their financial dealings accurately, maintaining a stronger tax compliance framework across the country.

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