How much cash can you deposit (and withdraw) in your bank savings account in a fiscal year to avoid being investigated by the income tax authorities?
Income tax regulations say that the total cash deposits or withdrawals in a savings account during a financial year should not exceed ₹10 lakh. However, you cannot receive ₹2 lakh or more in cash in aggregate from a person in a day in a single transaction; or, in transactions relating to one event or occasion from a person, in a single day.
Any cash deposit that exceeds ₹10 lakh across all of your savings accounts within a fiscal year (April 1–March 31) should be reported to the income tax department. Banks must disclose such transactions even if they are spread over several accounts.
What happens if you receive more than ₹10 lakh in your savings account in a fiscal year?
"Exceeding this threshold is considered a high-value transaction. Banks or financial institutions must report it to the department . Deposits above ₹50,000 in a single day require you to provide your PAN. You must submit Form 60/61 as an alternative if you don't have a PAN,” said Abhishek Soni of Tax2win.
To respond to an income tax notice regarding high-value cash transactions, you must have adequate proof to support your claim regarding the funds' origins. Bank statements, investment records, and inheritance documents are some of the documentation that needs to be produced. It is best to consult a knowledgeable tax advisor if you are unsure or have concerns about declaring the source of cash.
As far as cash transactions are concerned, according to Section 269ST, no one may receive more than ₹2 lakh (the cash receipt limit) from a person in any of the following situations: in total from a person in a single day, in connection with a single transaction, or connection with transactions from a person related to a single event or occasion.
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