If you deposit more cash than the prescribed limit in your bank account, then this information reaches the Income Tax Department directly. In such a situation, it is important that you understand the bank’s cash deposit rules well in advance, so that any kind of tax related problems can be avoided in the future.
What is the limit for depositing cash in a savings account?
If your account is a savings account and you deposit ₹ 10 lakh or more in cash in a year, then this transaction is reported by the bank to the Income Tax Department. This reporting is based on the total amount of cash deposited during a financial year (April 1 to March 31). That is, if you deposit an amount of more than ₹ 10 lakh several times at different times, then you can also come under the radar of the tax department.
Limit is a little higher for current account holders
If you are a businessman and your account is a current account, then in this case the limit is going to be a little relaxed for you. If more than ₹ 50 lakh cash is deposited in the current account annually, the bank has to inform the tax department about it. Therefore, it is very important to maintain complete transparency and records while doing business transactions.
Can any amount of money be deposited at once?
Technically, any amount can be deposited in the bank at once. You can deposit ₹1 lakh, ₹2 lakh or even ₹5 lakh at once. But it is not just about the amount, but also its source. If you deposit a lot of cash and there is no clear account or valid documents for it, then the Income Tax Department can question you.
PAN is mandatory when depositing Rs 2 lakh or more.
If you are depositing ₹ 2 lakh or more in cash at one time, then it is mandatory to present PAN card in the bank.
Without PAN card, the bank does not accept this amount. Therefore, always keep a copy of your PAN card with you, so that there is no problem later.
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If you break the rules, you may face a huge penalty.
If you exceed the set limit of cash deposit and are unable to explain the source of income, you may be sent a notice by the Income Tax Department. After this, not only will you have to give an explanation, but a penalty can also be imposed depending on the situation, which can further increase your financial problems.
Caution is the only protection: Keep records and do digital transactions
-Keep a complete account of cash transactions.
-Wherever possible, use digital transactions.
-If a large amount of cash has to be deposited in a special situation, then first consult your chartered accountant or bank officer.
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