Cash Deposit Limit in Saving Account

What is the Cash Deposit Limit in Saving Accounts?

According to the Income Tax department and the Reserve Bank of India, you can deposit up to ₹50,000 cash in a single day without furnishing a PAN card, and up to ₹10 Lakhs aggregate cash across all savings accounts in a financial year.

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 the Limit of Cash Deposit 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.

What Happens if You Deposit More Than ₹10 Lakh in Your Savings Account?

Crossing the ₹10 Lakh annual cash deposit threshold does not mean your money will be taxed immediately. Your bank will report this high-value transaction to the IT Department, and you will have to show proof of its source. 

1. Your bank will report this high-value transaction to the IT Department. It will not be taxed immediately, but the bank will send a Statement of Financial Transactions (SFT) to tax authorities.

2. The deposit shows up in your Annual Information Statement (AIS). If income doesn't match the deposit, you might get a notice.

3. Any cash deposit over ₹50,000 requires you to provide PAN card details.

How to Legally Explain Large Cash Deposits to the Income Tax Department?

If you deposit a large sum of cash in your bank account, you can keep your transactions fully compliant by maintaining basic supporting documents like:

• Past Bank Withdrawal Receipts

If you previously withdrew cash from your bank account and are redepositing it later, keep your past bank passbook entries as proof.

• Gift Declarations from Relatives

Money received as a gift from specified family members (parents, spouse, siblings) is exempt from tax under Section 56(2)(x). Keep a simple written gift deed or a signed declaration from the donor along with their PAN card copy.

• Agricultural Income Records

Income earned from agriculture is tax-free under Section 10(1). Maintain copies of land ownership documents (Khasra/Khatauni) or Mandi sale receipts to prove the origin of cash.

• Business Sales & Invoice Records

For small shopkeepers and self-employed professionals, maintain a daily sales register or digital UPI transaction log showing small customer payments collected over time.

What are the Cash Transaction Limits in Other Types of Accounts?

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 business 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 ₹5 Lakh to ₹2 Crore every month.

Cash deposits higher than ₹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 ₹1.5 Lakh in an FD in a financial year. 

• Credit Card Bill Payment Limit

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

Apart from this, UPI has a limit of ₹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 a savings account per day is ₹1 Lakh. You can, however, deposit up to ₹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 a savings account in a financial year is ₹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 banks have limits on cash deposits 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 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 a 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 a savings account -

• Crossing the cash deposit limit in a savings account per day of ₹2.5 Lakh for general and ₹5 Lakh for 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 ₹1 Lakh. However, you can deposit up to ₹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 ₹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.