Understanding Cash Deposit Limits in Bank Accounts for ITR Filing
Most of us have a savings account with a bank, often linked to UPI for convenient transactions. We frequently use these accounts to deposit or withdraw cash, sometimes in large amounts. However, it’s essential to be aware of specific regulations set by the Income Tax Department regarding cash deposits in savings accounts to avoid any legal issues.
Under Income Tax rules, there is a limit on the amount of cash that can be deposited in a savings account within a certain period. This measure aims to monitor cash transactions and prevent money laundering, tax evasion, and other illegal financial activities. For instance, if you deposit Rs 10 lakh or more in a financial year into your savings account, you must inform the Income Tax Department. For current accounts, this limit is Rs 50 lakh. While these cash deposits are not taxed immediately, financial institutions are required to report any transactions exceeding these limits to the Income Tax Department.
Additionally, individuals who haven’t filed tax returns for the past three years face specific TDS deductions on withdrawals. A 2% TDS applies to withdrawals exceeding Rs 20 lakh, and a 5% TDS is levied on withdrawals of Rs 1 crore or more within a financial year.
It’s important to note that TDS deducted under section 194N is not considered income but can be claimed as a credit while filing your Income Tax Return (ITR). Understanding and adhering to these regulations is crucial to ensure compliance and avoid potential issues with the tax authorities.
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