Cash Deposit Limit: The Income Tax Department has set the cash deposit limit to monitor the cash transactions of savings accounts, current accounts and financial institutions so as to prevent money laundering, tax evasion and other illegal financial activities.
In this era of inflation, saving along with earning has also become necessary. Most people have a savings account in some bank or the other. People use savings account to deposit cash and sometimes to withdraw large amounts at once. But do you know that there are some rules related to it and if you do not follow them, you may have to pay a penalty. Today we will tell you about those rules.
Know the rules before depositing money in a savings account
According to the income tax rules, there is a limit on cash deposits in a savings account. You can deposit a maximum of Rs 1 lakh in cash in a day. According to a Forbes report, if you deposit Rs 10 lakh or more in a financial year, then you will have to inform the IT department. But if you have a current account, then this limit is Rs 50 lakh.
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According to the report, it is a rule for financial institutions to report transactions exceeding these limits to the Income Tax Department.
The Income Tax Department has set this limit to keep an eye on the cash transactions of savings accounts, current accounts and financial institutions so that money laundering, tax evasion and other illegal financial activities can be prevented.
Know what is section 194A
If you withdraw more than Rs 1 crore from your savings account in a financial year, then 2% TDS will be deducted on it. Those who have not filed ITR for the last three years will have to pay 2% TDS, that too only on withdrawal of more than Rs 20 lakh and if such people have withdrawn Rs 1 crore in a financial year, then 5% TDS will be levied on them.
Section 269ST
Under section 269ST of the Income Tax Act, if a person deposits Rs 2 lakh or more in cash in a particular financial year, a penalty will be imposed on it. However, this penalty is not imposed on withdrawing money from the bank. Let us tell you that TDS deduction is applicable on withdrawals above a specific limit.
