Your Savings Account is an important tool formanaging daily finances. As is the case with anyfinancial tool, you must be well-informed about thevarious rules to operate your bank account optimally.For instance, you must know what is the minimumbalance of funds you need to maintain. Another criticalfactor is to know the cash deposit limit in a SavingsAccount.
Cash deposit limit in Savings Accountexplained
Depositing funds into your Savings Account is anessential step towards building savings securely.Besides bank transfers and depositing cheques,deposits in the form of cash are another wayincrease your bank balance. Rather than keeping cashstored at home, depositing it into your savings accountis prudent. A cash deposit limit refers to the maximumamount of funds you can deposit into your account inone day.
Cash deposit limit in your Savings Account
If you are wondering how much cash can be depositedin your Savings Account, you are in the right place. Asper the Reserve Bank of India (RBI) guidelines, you cadeposit up to 50,000 into your Savings Accountwithout furnishing your PAN card details. However, ifyou want to deposit a higher amount, you will need toprovide your PAN card details.
The cash limit set per day, per transaction, and fromone person is 2 lakhs. On the other hand, the cashdeposit limit in a Savings Account per financial year isset at 10 lakhs. Your bank will report a transactionthat exceeds this limit to Income Tax authorities.
Tax rules for cash deposits in your bankaccount
The RBI has set a Savings Account deposit limit of 10lakhs per financial year. If your cash deposits exceedthis amount, then you may receive a notice from theIncome Tax Department, flagging your transactions. However, the amount is not directly taxed.
You will need to file your returns, clearly mention yoursource of income, and pay taxes as per the relevantincome bracket. If you are unable to verify the sourceof funds, then the Income Tax Department, underSection 68 of the Income Tax Act, can impose a 60%tax, plus a 25% surcharge and a 4% cess on thedeposited amount.
Rules for cash deposits in Savings Account
Here is a quick summary of the rules for your SavingsAccount maximum deposit:
- You don’t need to furnish PAN card details to yourbank for a cash deposit of up to 50,000.
- For deposits above 50,000, you need to furnishPAN card details.
- Suppose you make a maximum deposit in a SavingsAccount of 2 lakhs or more in a single transaction,in aggregate from a single person, or in a day.Under Section 269ST, a 100% penalty is applied.
- The maximum amount in your Savings Account youcan deposit in cash per year is 10 lakhs.
Rules for large deposits in Savings Accounts
If you make a cash deposit of 10 lakhs and above in anfinancial year, then in all probability, your bank maynotify the Income Tax authorities. In such a case, youmay receive a notice from the IT department, whichwill want to know the source of the income. You willneed to declare the source of funds when filing yourreturns, and you will be taxed as per your incomebracket.
Other cash transaction limits
The cash withdrawal limit of a Savings Account per dayvaries from bank to bank. Typically, a more premiumaccount allows you to withdraw a higher limit. Yourbank may also have a monthly withdrawal limit. Besure to know the rules well when choosing the rightSavings Account for you.