Income Tax News: Your savings account is a valuable resource for day-to-day money management. To make the most out of your bank account, like with other financial tool, you need to be well-versed in its regulations. For example, you need to be aware of the minimal amount of money you have to keep on hand. Understanding a savings account’s cash deposit limit is another important consideration.
Boosting Savings Safely
One of the most important steps in safely increasing savings is making deposits into your savings account. Deposits made in cash are an additional method of raising your bank balance in addition to bank transfers and check deposits. It makes sense to put cash into your savings account rather than storing it at home. The maximum amount of money you can deposit into your account in a single day is known as your cash deposit limit.
Savings Deposit Rules Unveiled
You have come to the correct spot if you’ve been wondering how much money you can put into your savings account. You do not need to provide your PAN card data in order to deposit up to ₹50,000 into your savings account, as per Reserve Bank of India (RBI) standards. You will have to supply your PAN card data, though, if you wish to deposit a larger sum.
A monetary limit of ₹2 lakhs is set for each day, each transaction, and from a single individual. Conversely, ₹10 lakhs is the maximum amount of cash that can be deposited into a savings account in a given fiscal year. Any transaction that goes over this cap will be reported to income tax authorities by your bank.
Potential IT Notice but No Direct Tax Impact
The RBI has established a ₹10 lakh annual maximum for deposits into savings accounts. Should your cash deposits above this sum, the Income Tax Department could send you a notification, highlighting your transactions. But there isn’t a direct tax on the sum.
It will be necessary for you to file your returns, identify your income source correctly, and pay taxes based on the applicable income bracket. Under Section 68 of the Income Tax Act, the Income Tax Department may apply a 60% tax, together with a 25% surcharge and a 4% cess, on the deposited amount if you are unable to prove the source of money.
Rules for cash deposits in Savings Account
- For cash deposits up to ₹50,000, your bank does not require you to provide them with your PAN card details.
- In order to make deposits larger than ₹50,000, you must provide PAN card data.
- Let’s say you deposit a maximum of ₹2 lakhs or more in a single transaction, from a single individual overall, or in a single day, into a savings account. There is a 100% penalty under Section 269ST.
- The annual limit that you can deposit in cash into your savings account is ₹10 lakhs.
The ₹10 Lakh Cash Deposit Trigger and IT Notifications
Most likely, your bank will alert the Income Tax authorities if you make a cash deposit of ₹10 lakhs or more during a fiscal year. In this scenario, the IT department might send you a notification asking to know where the money is coming from. When submitting your returns, you will have to disclose the source of the cash and pay taxes based on your income bracket.
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