From 1 April 2025, there may be changes in the rules for depositing cash in a savings bank account in India. These changes are happening under the Income Tax Rules, so that people will have to take more care in their financial transactions. Understanding and following the cash deposit limit has become even more important, so that income tax notice can be avoided.
According to these rules, the maximum limit of cash deposits in a savings account in a financial year is Rs 10 lakh. If this border is crossed, the bank will have to inform the Income Tax Department. In addition, PAN card may also be required if you deposit more than Rs 50,000 a day.
New income tax rules for cash deposits in savings accounts
The table below gives details of the rules for depositing cash in the savings bank account:
| Description | Rule |
| Annual cash deposit limit | 10 lakh rupees per financial year |
| Daily deposit limit | 2 lakh rupees per transaction |
| PAN card requirement | PAN required for more than Rs 50,000 |
| Income tax reporting | Banks report more than Rs 10 lakh deposit |
| Cash transaction limit | No more than 2 lakh rupees in a day |
| Tax theft prevention | Income tax department monitoring on major transactions |
| fines and penalties | 60% tax and fine for unfair source |
Cash deposits and their effects
It is important to understand and follow the rules of cash deposit so that income tax notice can be avoided. If you deposit more than Rs 10 lakh cash in a financial year, then you can get a notice from the Income Tax Department. To respond to this notice, you must have enough evidence about the source of funds.
PAN card may also be required if you deposit more than Rs 50,000 a day. Apart from this, the Income Tax Department is also monitored on cash transactions more than Rs 2 lakh.
Benefits and disadvantages of depositing cash in savings account
Benefit
- Safe investment: Money is safe in savings account and you also get interest.
- Withdraw money easily: Whenever needed, you can easily withdraw your money.
- Tax Benefits: Interest up to Rs 10,000 is tax free (for people below 60 years of age).
Loss
- Cash transaction limit: Cash can not do more than Rs 2 lakh in a day.
- Annual deposit limit: Income tax notice can be obtained on depositing more than Rs 10 lakh in a financial year.
- PAN card requirement: PAN card will have to be given at more than Rs 50,000.
Documents required for cash deposit
While depositing the cash you may need the following documents:
- PAN Card: For more than Rs 50,000.
- Form 60/61: If there is no PAN card.
- Bank Passbook: For account information.
- ID proof: for identity.
Rules of cash transactions and adherence to them
Cash transaction limit
Cash transactions cannot be done more than Rs 2 lakh in a day. This rule is under section 269 ST, which controls cash transactions.
Impact of cash transactions
- Tax evasion prevention: Income tax department is monitored on large cash transactions.
- Penal fines and punishment: 60% tax and penalty for unfair sources can be imposed.
How to answer income tax notice?
If you get income tax notice, you have to provide enough evidence about the source of funds. For this you can present the following documents:
- Bank statement
- Investment records
- Inheritance documents
If you are not able to decide anything or are concerned about the source of cash, then you can consult a tax advisor.
conclusion
The limit for depositing cash in the savings bank account under the new Income Tax Rules is Rs 10 lakh per financial year. This rule is for monitoring by the Income Tax Department, so that tax evasion can be prevented. It is necessary to follow these rules to make your financial transactions safe and transparent.
Disclaimer: This article is for general information and should not be taken as any specific financial advice. It would be appropriate to consult a tax advisor to understand the real rules and their impact.
