Have you ever wondered how much cash you can deposit or withdraw in your bank savings account within a fiscal year without attracting scrutiny from the income tax authorities? According to personal finance experts, the total cash deposits or withdrawals in a savings account during a financial year should not exceed ₹10 lakh. Additionally, you cannot receive ₹2 lakh or more in cash from a single person in one day, either in a single transaction or for transactions linked to a single event or occasion.
If the total cash deposits across all your savings accounts exceed ₹10 lakh during the financial year (April 1–March 31), the bank must report these transactions to the income tax department, even if they are spread across multiple accounts.
What happens if you exceed ₹10 lakh in cash deposits in a fiscal year?
Deposits above ₹10 lakh in a financial year are considered high-value transactions. Under Section 114B of the Income Tax Act, 1962, banks and financial institutions are required to report such transactions to the Income Tax Department. Furthermore, any deposit exceeding ₹50,000 in a single day will require you to provide your Permanent Account Number (PAN). If you don’t have a PAN, you must submit Form 60/61.
Also Read- How to Check Your ITR Refund Status Via PAN Card; Here is the Step by Step Process
How to respond to an I-T notice for high-value cash transactions?
If you receive an income tax notice regarding high-value cash deposits, you need to provide proof to justify the source of the funds. This can include bank statements, investment records, or inheritance documents. It is advisable to consult a tax advisor if you’re unsure about how to declare the source of the cash.
Additionally, according to Section 269ST, you cannot receive more than ₹2 lakh in cash from any individual on the same day, for a single transaction, or for transactions related to a single event or occasion.