The importance of banking and financial transactions is increasing rapidly in modern times. However, if you deposit a large amount of cash in your bank account, it can cause trouble for you. In India, Income Tax Department has strictly monitoring such transactions that may indicate tax evasion or illegal activities.
In particular, if you have deposited a cash amount of ₹ 10 lakh or more in your Savings Account in a financial year, then you can get a notice from the Income Tax Department. In this article, we will know in detail how this situation can be avoided and what should be kept in mind.
Overview of cash deposits
| Parameter | Description |
| Saving account limit | ₹ 10 lakh per financial year |
| Current account limit | ₹ 50 lakh per financial year |
| Cash deposit limit in one day | Reporting at more than ₹ 2 lakh |
| PAN card mandatory | On more than ₹ 50,000 cash deposit |
| TDS applies? | Yes in some situations |
| It is necessary to tell the source of income? | Yes when notice comes |
What will happen if you are more than the limit?
1. Reporting of Income Tax Department
If you have deposited more than ₹ 10 lakh cash in a financial year, then the bank will give information about this transaction to the Income Tax Department. Apart from this, if you have deposited more than ₹ 2 lakh cash in a day, then this report will be done.
2. Possibility of getting notice
Income tax department can send you notice and ask you where this money came from. If you are unable to answer the correct answer, then you may have to pay heavy fine or tax.
3. Tax and Penalty
If you are not able to prove your source of income, then you may have to pay surcharge and cess along with up to 60% tax.
Noted things when depositing cash in bank account
1. Keep the document ready
- Keep the appropriate document for every cash deposit.
- Keep salary slip, gift deed or other certificate ready.
2. Do small transactions
- Instead of depositing the large amount at once, deposit it in small parts.
3. Use PAN card
- Give PAN card compulsorily when depositing more than ₹ 50,000 cash.
4. Fill Income Tax Return (ITR)
- Show all your income and transactions correctly in ITR.
High-value transactions that trigger probe
Income Tax Department not only keeps a cash deposit but also keeps an eye on other high-value transactions. These include:
- Payment of Credit Card Bill: Payment of more than ₹ 1 lakh.
- Property purchase/sales: ₹ 30 lakhs or more.
- Mutual Fund and Bond Investment: More than ₹ 10 lakh.
- Foreign currency transaction: ₹ 10 lakh or more.
What to do if you get Income Tax Notice?
1. Don’t panic
If you get a notice, be calm and prepare the document.
2. Present the document
Show whatever evidence you have to the department. This can include bank statement, salary slip etc.
3. Take the help of expert
If the matter becomes complicated, seek the help of a chartered accountant or tax expert.
Why is it necessary to follow Income Tax rules?
These rules imposed by Income Tax Department have been made to prevent black money and tax evasion. The government wants people to prioritize digital transactions and maintain transparency.
Disclaimer:
This article has been written only for the purpose of information. If any Income Tax Notice comes related to you, then please consult an expert. The information above is based on the actual rules and can be updated from time to time.
Through this article, we understood how to deposit a large amount of cash can bring you to the radar of Income Tax. You can avoid these problems by maintaining proper documents and transparency.
