In today’s time, Saving Account is an important part of every person’s financial plan. Whether you want to protect your savings or to do regular transactions, a savings account is necessary for you. But do you know that there are some rules for depositing and withdrawing money in a savings account? If you do not follow these rules, you may have to face income tax notice. In this article, we will tell you about all the necessary rules and their effects related to the savings account.
Saving Account and Income Tax Rules
There is no limit to deposit money in a savings account, but the Income Tax Department has made some special rules to stop activities like money laundering and tax evasion.
Saving account overview
| Speciality | Description |
| Cash deposit limit | Notice can come on depositing more than Rs 10 lakh in a financial year. |
| Daily transaction limit | Cash cannot be deposited more than Rs 2 lakh in a day. |
| PAN number mandatory | PAN number will have to be given for depositing more than Rs 50,000. |
| Use of Form 60/61 | If there is no PAN number, then Form 60/61 will have to be submitted. |
| High value transaction | Transactions of more than Rs 10 lakh will be considered a high value transaction. |
| TDS cut | TDS will be implemented on withdrawal of more than Rs 1 crore. |
Cash deposit limit and notice threat
Some limitations of cash deposit in savings account have been fixed. If you violate these boundaries, the bank will have to inform the Income Tax Department.
Annual cash deposit limit
- If you deposit more than Rs 10 lakh cash in a financial year (1 April to 31 March), it will be considered as “High Value Transaction”.
- In such cases, banks or financial institutions share information under Section 114B of the Income Tax Act.
Daily cash deposit limit
- If you deposit Rs 2 lakh or more cash in a day, it comes under section 269st and can be penalty.
PAN number required
- If you deposit more than Rs 50,000 cash in a day, it will be mandatory for you to give PAN number.
- In case of lack of PAN number, Form 60/61 will have to be filled.
High Value Transaction: What does it mean?
When there are major transactions in your account, it is called “High Value Transaction”. Example:
- Total cash deposits or withdrawal in a financial year exceed Rs 10 lakh.
- There should be a total transaction of more than Rs 50 lakh through check or online transactions.
In such cases, the Income Tax Department can investigate and the notice can be sent to you.
What to do when income tax notice comes?
If you receive income tax notice, there is no need to panic. For this you have to take the following steps:
- Show the source of the fund: To support your claim, submit bank statement, investment records, or other documents.
- Seek the help of a tax advisor: If you are unable to answer yourself, consult an expert.
- Reply on time: Follow the last date to respond to the notice so that no additional action is taken.
Other important rules
Minimum balance
- Banks have recently increased the limit of minimum balance. Example:
- SBI: ₹ 5000
- PNB: ₹ 3500
- Canara Bank: ₹ 2500
If you fail to maintain a minimum balance, you may have to pay a fine.
TDS deduction
- If you withdraw more than Rs 1 crore in a financial year from your savings account, then 2% TDS will be deducted.
- For the last three years, this limit will be only ₹ 20 lakh on those who did not file ITR.
Promotion of digital banking
The Reserve Bank of India (RBI) has implemented several new rules to promote digital banking. These include changes in ATM transaction fees and interest rates:
- ATM Fee: Only three free transactions every month.
- Interest Rate: Interest rate on savings account has been increased to 3.5%.
Precautions and suggestions
- Link all your bank accounts with PAN and Aadhaar card.
- Always keep their source clear while doing big transactions.
- Before making a cash deposit, understand the rules of the bank and the Income Tax Department.
- In case of any doubt, contact the tax advisor or bank officer.
conclusion
It is very important for saving account holders to know how much amount can be deposited and withdrawn in their account. If you follow these rules, not only can you avoid the investigation of the Income Tax Department but can also make your financial transaction transparent.
Disclaimer: This article is written only for the purpose of providing information. Please seek specialist advice before taking any financial decision.
