Cash Deposit Limit in Saving Account

According to the Income Tax department and the Reserve Bank of India, there are certain rules and regulations related to savings bank accounts. 

Did you know that there is a certain limit of cash deposit in savings account? You might attract penalties or legal complications if you ignore them. Thus, let’s take a look at the cash deposit limit in bank accounts.

What is the Cash Deposit Limit in Savings Account as per Income Tax?

Before digging deep, let’s look at the limits in short -

What is Cash Deposit?

Cash deposit refers to 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 depositing it and it will still be referred to as a cash deposit transaction.

What is the Limit for Savings Accounts?

Be it SBI or HDFC Bank, these rules are set by RBI and are followed across banks. Let’s look at the upper limit to the amount that you can deposit in your savings bank account -

• In a financial year: 

The cash deposit limit in savings accounts as per income tax is ₹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.

• In a day:

The cash deposit limit in a day is ₹50,000. You need to submit your PAN details for any transaction higher than this. You can submit the Form 60/61 if you don’t have a PAN card. Please Note: 

• The Income Tax department monitors cash deposits.

• The cash deposit limit in the savings account refers to the amount deposited by each person. 

• It is calculated taking into account all the bank accounts of an individual.

Cash Transaction Limits

Now that we have learnt about the cash deposit limit in savings bank accounts, let’s look at the limits of some other common banking transactions -

• Cash Deposit Limit in Current Account

Current accounts are primarily used by businesses companies for transactions. The limits and rules for current accounts are higher than those of savings accounts. This is done so that enterprises can carry out their business transactions without any hurdles.

However, there is no specific cap on the cash deposit limit in a current account and it varies based on the bank. For example, in SBI, you can have different types of current accounts with limits ranging from Rs.5 Lakh to Rs.2 Crore every month.

Cash deposits higher than Rs.50 Lakh in a current account will attract questions from the IT department about the source of the funds. It won’t immediately be a red flag, but will be monitored. 

• Fixed Deposit Limit

Fixed deposits are a safe investment option to earn a lump sum interest. There is no limit on how much money you can deposit in a fixed deposit account. However, if you want tax benefits, you should not exceed the threshold of Rs.1.5 Lakh in a FD in a financial year. 

• Credit Card Bill Payment Limit

Any credit card bill payments above Rs.1 Lakh in cash must be reported. Credit card due more than Rs.50 Lakh, if paid in a financial year, through any mode, need to be reported. 

Apart from this, UPI has a limit of Rs.20,000 when it comes to paying credit card bills. Net banking limits regarding paying credit card bills vary depending on the bank. 

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 t

oo 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. 

Reasons Behind Cash Deposit Limits in Bank Accounts

Looking at so many rules, you must be wondering why banks impose such regulations. Let us look at why do banks have limits to cash deposit in bank accounts - 

• In order to reduce chances of money laundering and fraud

• Due to limits, large sums of cash cannot be moved freely, thus preventing any illicit transfer

• Improves transparency and helps keep a track of big transactions

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 ₹2.5 Lakh for general and ₹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 ₹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, a 25% surcharge, and a 4% cess are imposed

• The IT department also prescribes penalties if you end up receiving ₹2 Lakh or more as a cash deposit in a financial year

Section 194A

According to Section 194A of the Income Tax Act -

• 2% TDS will be deducted on withdrawing more than ₹1 Crore in a financial year

• If ITR is not filed for the last 3 years, 2% TDS will be deducted on withdrawing more than ₹20 Lakh in a financial year

• If ITR is not filed for the last 3 years, 5% TDS will be deducted on withdrawing more than ₹1 Crore in a financial year

Section 269ST

According to Section 269ST of the Income Tax Act -

• Penalty for depositing more than ₹2 Lakh cash in a bank account in a financial year

• No penalty for withdrawing money from the bank; TDS deduction is applicable on withdrawals above a specific limit

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.