Income Tax rule: How much cash can you deposit in your bank account to get an income tax notice
Income tax rule: To avoid tax scrutiny, ensure that cash transactions in savings accounts remain below Rs 10 lakh annually. Transactions above this limit are reported to the Income Tax Department.
Income tax rule: Have you ever wondered how much cash you can deposit and withdraw from your bank savings account in a financial year to avoid scrutiny by income tax authorities? According to personal finance experts, under income tax rules, the total cash deposit or withdrawal in a savings account in a financial year (April 1 to March 31) should not exceed ₹10 lakh. Receiving ₹2 lakh or more in cash from an individual in a day, whether it is a single transaction or transactions related to a single event or occasion, is against the rules.
If you deposit more than ₹10 lakh in cash in all your savings accounts combined, the bank will inform the income tax department about it. This information will be given despite the transactions being spread across different accounts.
What happens if you deposit more than ₹10 lakh?
Abhishek Soni, CEO and co-founder of Tax2win, said, “If more than ₹10 lakh cash is deposited in your savings account in a financial year, it is considered a high-value transaction. The bank or financial institution has to report it to the Income Tax Department, which is mandatory under Section 114B of the Income Tax Act, 1962. If you deposit more than ₹50,000 in a single day, you will have to provide your PAN number. If you do not have a PAN, Form 60/61 will have to be submitted.”
How to respond to an I-T notice?
If you receive an income tax notice for a high-value cash transaction, you will have to submit sufficient documents to prove the source of your funds. Bank statements, investment records and inheritance documents are some of the documents that need to be submitted. If you are unsure or concerned about declaring the source of cash, seek advice from an experienced tax advisor.
Restrictions on receiving cash above ₹2 lakh
As per section 269ST of Income Tax, no person can receive more than ₹2 lakh (cash receipt limit) from any person in any of the following circumstances- In the aggregate from any person in a single day, in a single transaction, or in respect of transactions with any person relating to a single event or occasion.
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