Savings account transaction limit: At some point, everybody might have wondered how much maximum money can be kept in a savings account or how much cash you can withdraw in a day. Personal finance experts suggest that according to Income Tax Rules, the total cash deposit or withdrawal in a savings account during one financial year should not exceed Rs 10 lakh.
Additionally, as per section 269ST, an individual cannot take Rs 2 lakh or more in cash in a single transaction or multiple transactions related to the same event in a single day. If the total cash deposit exceeds Rs 10 lakh in all your savings accounts during a financial year (between April 1 and March 31), the Income Tax Department must be informed. Banks are required to disclose such transactions, even if they are spread across multiple accounts.
Understanding High-Value Transactions in Your Savings Account
If more than Rs 10 lakh cash comes into your savings account in a financial year, it will be considered a high-value transaction. Banks or financial institutions are required to inform the Income Tax Department about this under Section 114B of the Income Tax Act, 1962. Additionally, if you deposit more than Rs 50,000 in a day, you must provide your PAN number. If you do not have a PAN, you will need to submit Form 60/61 as an alternative.
How to Handle Income Tax Notices?
To respond to income tax notices related to high-value transactions, you must provide sufficient evidence supporting your claim regarding the source of funds. These may include bank statements, investment records, or documents related to inheritance. If you are unsure or concerned about the source of the cash, it is advisable to consult a tax advisor.
Key information You need to Know
- Cash deposits or withdrawals in a savings account should not exceed Rs 10 lakh in a financial year to avoid Income Tax scrutiny.
- Daily cash transactions of Rs 2 lakh or more are prohibited under Section 269ST.
- High-value transactions exceeding Rs 10 lakh in a year must be reported to the Income Tax Department.
- If you make a cash deposit of Rs 50,000 or more in a day, a PAN is required.
- Responding to Income Tax notices requires providing sufficient documentation to explain the source of funds.
