Savings accounts in most banks have a minimum balance requirement. But is there a cash deposit limit in savings account? Read ahead to know more about it.
How Much Money Can You Keep in Savings Account?
There is no limit on how much money you can keep in a savings bank account.
However, banks have a minimum balance requirement that needs to be maintained in your savings bank account. If you fail to do so, you need to pay a penalty.
Some banks do allow you to open zero-balance savings accounts, which means you can withdraw all your money from the account without attracting a penalty.
What is the Cash Deposit Limit in Savings Account as per Income Tax?
Cash deposit refers to either depositing money manually into your account or through modes like money transfer or ATM. People often deposit money in banks to carry out transactions or to keep it safe. You can withdraw the money after the deposit has been made, and it will still be referred to as a cash deposit transaction.
The cash deposit limit in savings account as per income tax is Rs.10 Lakh during a financial year. All banks or financial institutions must declare large cash deposits according to Section 114B of the Income Tax Act, 1962.
Cash deposits are monitored by the Income Tax department, and the cash deposit limit in savings account refers to the amount deposited by each person. It is calculated taking into account all the bank accounts of an individual.
Cash Deposit Limit in Savings Account per Day
The cash deposit limit in savings account per day is Rs.1 Lakh. You can, however, deposit up to Rs.2,50,000 in a day as long as you don’t do it too often.
You must just remember that the cash deposit limit in savings account in a financial year is Rs.10 Lakh and you must not cross that amount. If you deposit more than that amount, the IT department may be notified.
What Will Happen if You Cross the Cash Deposit Limit in Savings Account per Month?
If you cross the cash deposit limit in savings account, the banks are required to report the excess transactions to the Income Tax Department. But, they will not be taxed outright. Here are certain things that you must keep in mind regarding the cash deposit limit in savings account -
Crossing the cash deposit limit in savings account per day of Rs.2.5 Lakh for general and Rs.5 Lakh by senior citizens is considered a large deposit
The IT department will contact you through Email or SMS to furnish details about the source of income
To deposit more than Rs.50,000, you will have to show your PAN card details if it is not already provided to the bank
On being unable to explain the origin of the income, it is well within the rights of the IT department to serve notices under Section 68 of the IT Act
If you still cannot verify the income sources, a 60% tax, 25% surcharge, and 4% cess is imposed
The IT department also prescribes penalties if you end up receiving Rs.2 Lakh or more as a cash deposit in a financial year
Conclusion
There is as such no hard and fast rule about the cash deposit limit in savings account per month. On the other hand, there is a cash deposit limit in savings account per day, which is ideally Rs.1 Lakh. However, you can deposit up to Rs.2.5 Lakh on certain occasions.
When told to explain why you crossed the cash deposit limit of one year, you can show it as household savings, a gift, or a loan from family or friends. You might be required to show the PAN card of the payer or a receipt to prove their authenticity.
On depositing more than Rs.50,000 you are required to provide your PAN card details but you can make a declaration about the particulars of the deposit in Form 60 in case you don’t have a PAN card.
These measures are put in action by the Income Tax department to keep a check on the cash deposits being made. There are separate amounts as limits for different types of accounts.
