Income Tax News: In today’s financial landscape, having a savings account is essential for everyone. Not only does it enable access to various government schemes, but it also facilitates digital transactions. In India, there are no restrictions on opening a savings account, which has led many individuals to maintain two or more accounts. Savings accounts offer security for your money, with banks providing interest on the deposited amount. However, while rules exist regarding minimum balances, there’s no clear limit on how much money can be kept in a savings account.
Unlimited Savings Account Deposits
As per regulations, there is no upper limit on the amount of money that can be deposited in a savings account. Whether through cheque or online transactions, you can deposit amounts ranging from a few rupees to crores. However, if the amount in your account falls under the income tax purview, you will be required to declare the source of that income.
Cash Deposit Regulations
While there are no restrictions on online or cheque deposits, certain rules apply to cash deposits. If you deposit ₹50,000 or more in cash, providing a PAN number is mandatory. The daily cash deposit limit stands at ₹1 lakh, though for irregular depositors, this limit may extend to ₹2.5 lakh. Over a financial year, individuals can deposit up to ₹10 lakh in cash across all accounts.
Income Tax Scrutiny on Large Cash Deposits
Any individual depositing more than ₹10 lakh in cash within a financial year will have their transaction reported to the Income Tax Department. If the source of income cannot be satisfactorily explained, the person may face investigation, and penalties, including 60% tax, a 25% surcharge, and a 4% cess, could be imposed.
However, if you have valid documentation for the income, there is no issue with cash deposits exceeding ₹10 lakh. It is also advisable to invest large sums in fixed deposits (FDs) or other investment avenues for better returns rather than keeping excessive amounts in a savings account.
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