Depositing big cash in your bank account? Read this before it triggers a tax notice.
We all know saving money is a smart move. You earn, you save, and you stash it safely in your bank account. Simple, right? Well, not exactly—especially if you’re dealing with large cash deposits. There’s a limit to how much cash you can put into your savings account without raising red flags at the Income Tax Department. And yep, crossing that line can land you a tax notice
What’s the ₹10 Lakh Rule Everyone’s Talking About?
If you deposit ₹10 lakh or more in cash across all your savings accounts in one financial year (April to March), the Income Tax Department gets a heads-up. It doesn’t matter if it’s one account or five—as long as it’s linked to your PAN, everything adds up.
This is called a High-Value Financial Transaction, and banks are legally required to report it.
So… Who Reports It? (Spoiler: Not You)
Banks and post offices automatically report these large cash deposits to the tax authorities. Once they do, the Income Tax Department cross-checks this info with your ITR (Income Tax Return). If your income on paper doesn’t match the kind of cash you’re depositing… that’s when the notice might pop up.
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Daily Deposit Rule: The ₹50,000 Trigger
Planning to drop ₹50,000 or more in cash into your account in a single day? You’ll have to show your PAN card. No PAN? Then you need to fill out Form 60 or 61. Either way, you can’t just walk in with a big wad of cash and expect no questions.
Interest on Savings? Yup, That’s Taxable Too
Here’s something most people forget: the interest you earn from your savings account isn’t entirely tax-free. If it crosses ₹10,000 in a year, the extra bit is counted as “Income from Other Sources” and gets taxed according to your slab.
- Section 80TTA: If you’re below 60, you can get a deduction of up to ₹10,000 on interest from savings accounts.
- Section 80TTB: Senior citizens? You’re covered for up to ₹50,000 (including interest from FDs and post office accounts).
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Big Cash Transactions: There’s a ₹2 Lakh Limit Too
This one’s lesser-known but equally important. As per Section 269ST of the Income Tax Act, you can’t receive ₹2 lakh or more in cash from a single person in one day—or even across a single transaction. It applies to gifts, sales, loans—everything. Break this rule and you could face a hefty penalty.
Got an Income Tax Notice? Don’t Panic—Here’s What to Do
Getting a notice from the tax department can feel scary—but it doesn’t mean you’re in trouble. It could just be a query. Here’s how to handle it smartly:
- Read it properly—don’t just skim.
- Gather your documents—bank statements, income proofs, investment slips.
- Talk to a CA if you’re unsure. A good tax advisor can save you a lot of stress.
- Reply on time through the official online portal. Ignoring it? Not a great idea.
Quick Recap: Stay on the Right Side of the Taxman
- Cash deposits over ₹10 lakh/year? Tracked and reported.
- Deposit over ₹50,000 in a day? PAN is a must.
- Savings account interest above ₹10K? Taxable.
- Receive ₹2 lakh+ cash in one day? Not allowed.
Final Thought: Don’t Let Good Habits Turn Risky
Saving money is great. But keeping the tax rules in mind while doing it? Even better. With a few simple checks—like filing your returns on time, staying below the cash deposit radar, and declaring interest income—you can keep things smooth and stress-free.
When in doubt, talk to a tax pro. Better safe than sorry.
For the latest updates and changes to income tax rules, always refer to the official Income Tax Department website.
