Every individual is regulated by several income tax rules, which he/she must adhere. Likewise, the department has set certain guidelines to deposit cash in saving/current account in a single financial year. The Income Tax department controls and monitors cash transactions.
As per the income tax rules, the total amount of cash deposit or withdrawal in a savings account in a single financial year should not be above Rs 10 lakh. However, cash deposit limit in current accounts has been kept at Rs 50 lakh. Surpassing these limits may attract notices from the department.
Moreover, IT Act’s section 269ST outlines penalties for receiving Rs 2 Lakh or more in cash within a specified period, barring bank withdrawals. Furthermore, under Sections 269SS and 269T, accepting or repaying cash loans exceeding Rs 20,000 annually can attract penalties equivalent to the loan amount.
Cash deposits above Rs 10 lakh in a financial year are considered high-value transactions. Banks and financial institutions are mandated to report such transaction to the IT Department, as per the section 114B of the IT Act. Meanwhile, cash deposit of more than Rs 50,000 in a single day requires PAN number, or the submission of Form 60/61.
Withdrawals over Rs 1 crore in a single financial year are subject to a 2% TDS, under section 194N, which outlines rules for TDS on cash withdrawals. However, non-filers have to pay a 2% TDS on cash withdrawals over Rs 20 lakh and a 5% TDS on withdrawals more than Rs 1 crore.
Key Takeaways From The Income Tax Rules
- Section 269ST outlines penalties for receiving Rs 2 Lakh or more in cash within a specified period, barring bank withdrawals.
- The total amount of cash deposit or withdrawal in a savings account in a single financial year should not be above Rs 10 lakh.
- Cash deposit limit in current accounts is Rs 50 lakh.
- Cash deposit of more than Rs 50,000 in a single day requires PAN number, or the submission of Form 60/61.
- Withdrawals over Rs 1 crore in a single financial year are subject to a 2% TDS.
