Understanding Cash Deposit Limits in Savings Accounts
The cash deposit limit in savings accounts refers to the maximum amount of cash that an individual can deposit within a specified period without attracting the attention of tax authorities. This limit is regulated by the Indian Income Tax Act to monitor cash flow, curb money laundering, and prevent tax evasion.
Cash Deposit Limits and Reporting Requirements
As per the Income Tax Act:
- Individuals depositing INR 10 lakh or more in a savings account in a fiscal year must notify tax authorities.
- For current accounts, the reporting threshold is INR 50 lakh.
- While deposits exceeding these limits are not immediately taxable, banks must report such transactions to the Income Tax Department.
Section 194N: Tax Deducted at Source (TDS) on Withdrawals
Section 194N governs TDS on cash withdrawals:
- Withdrawals above INR 1 crore attract a 2% TDS.
- If income tax returns were not filed for the last three years:
- A 2% TDS applies to withdrawals exceeding INR 20 lakh.
- A 5% TDS applies to withdrawals exceeding INR 1 crore.
- TDS under Section 194N is not categorized as income but can be used as a credit when filing ITR.
Section 269ST: Penalties on Cash Transactions
Section 269ST imposes penalties for cash receipts exceeding INR 2 lakh in a single transaction or year. However, this penalty does not apply to bank withdrawals.
Sections 269SS and 269T: Cash Loan Restrictions
- Accepting or repaying cash loans above INR 20,000 may result in penalties equal to the loan amount.
Taxation of Cash Deposits in Bank Accounts
Deposits aligned with declared business turnover under Sections 44AD/44ADA are exempt from penalties. However, unexplained deposits may lead to:
- Notices under Section 68.
- Taxation at 60% with a 25% surcharge and 4% cess.
Other Cash Transaction Limits
1. Cash Deposit Limit in Current Accounts
Current account limits vary by bank:
- SBI: INR 5 lakh to INR 100 crore per month.
- HDFC: INR 60 lakh or 10x the current monthly balance.
2. Cash Transaction Limits
- Cash transactions exceeding INR 2 lakh per day are restricted under Section 269ST.
- All banks enforce cash transaction limits below this threshold.
3. Cash Withdrawal Limit
- There are no universal withdrawal limits, but banks report large withdrawals.
- Individuals with accounts in multiple banks can withdraw INR 1 crore per bank without TDS implications.
4. Cash Gift Limit
- Gifts up to INR 50,000 in a financial year are tax-free.
- Gifts from relatives (parents, spouse, siblings, in-laws) are fully exempt.
5. Fixed Deposit (FD) Limits
- Tax-saving FDs allow investments from INR 100 to INR 1.5 lakh per financial year with tax benefits.
6. Credit Card Bill Payment Limit
- SBI: INR 50,000 per day, INR 25,000 per transaction.
- HDFC: INR 49,000.
7. Real Estate Transactions Limit
- Cash transactions above INR 20,000 in real estate purchases are prohibited.
- Section 269SS imposes a 100% penalty on cash payments above INR 20,000 for property purchases.
Common Queries
How Much Money Can Be Deposited in a Savings Account?
While there are no legal deposit limits, banks may impose their own restrictions.
Rules for Large Deposits in Savings Accounts
- Deposits exceeding INR 2 lakh in a day may trigger scrutiny.
- Proof of income/source of funds may be required.
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How Much Money Can Be Transferred Without Raising Suspicion?
- There is no fixed limit, but frequent large transactions may prompt tax scrutiny.
Maximum Amount Allowed in a Savings Account
- No specific cap exists, but high-value transactions should comply with tax laws.
