Income Tax Rule: Cash Limits in Savings Accounts to Avoid I-T Notices
Ever wondered how much cash you can handle in your bank savings account before attracting attention from the Income Tax Department? To stay compliant, ensure your total cash deposits and withdrawals across all savings accounts do not exceed ₹10 lakh in a fiscal year (April 1 to March 31).
Key Rules to Note:
- ₹10 Lakh Annual Limit: Banks report total cash transactions exceeding ₹10 lakh to tax authorities.
- Single-Day Limits: Depositing or withdrawing more than ₹50,000 in cash in a single day requires a PAN or Form 60/61.
- ₹2 Lakh Cap on Cash Receipts: Receiving ₹2 lakh or more from one person in a single day, related to one event, or in aggregate transactions is prohibited under Section 269ST.
Consequences and How to Respond:
If you surpass these thresholds, the Income Tax Department may issue a notice. To respond effectively, keep documentation such as bank statements, investment records, or inheritance papers to prove the legitimacy of funds. Seek guidance from a tax advisor to ensure compliance.
Avoid unnecessary scrutiny by adhering to these cash transaction norms. For expert advice, always consult financial and legal professionals
