Cash Deposit Limit at 360 View

Cash Deposit Limit in Saving Account as Per Income Tax Act (2024)

Individual who deposited cash in saving account not more than Rs. 10 Lakhs in a Fiscal Year.

Individual who has the current account than cash deposit limit not more than Rs. 50 Lakhs.

Section 194N deploys

1.If withdrawal exceeding Rs. 1 Crore with in a fiscal year hence 2% TDS should be deducted.

2.If Individual who did not filed their income tax return for the past 3 years hence 2% TDS should be deducted while withdrawal exceeding Rs. 20 lakhs, while 5% TDS should be deducted if withdrawal amount above Rs. 1 Crore in the same FY.

Section 194N TDS should be utilized as credit while filling the Income tax Return.

Section 269ST, Section 269SS and Section 269T

Section 269ST of the Income Tax Act stipulates penalties for individuals who receive INR 2 lakh or more in cash within a specific year or transaction. However, this penalty does not apply to bank withdrawals, although TDS deductions are applicable to withdrawals that surpass the established limits.

The regulations set forth in Sections 269SS and 269T of the Income Tax Act pertain to cash loans. Accepting or repaying cash loans exceeding INR 20,000 in a given year might lead to penalties equivalent to the cash loan amount.

It’s prudent to stay updated with the latest income tax regulations and guidelines to ensure compliance and proper handling of cash transactions within the framework of the law.

How is the Cash Deposited in a Bank Account Taxed?

As per the Indian Income Tax Act, there are specific regulations concerning cash transactions, including significant cash deposits.

Individuals who deposit cash into a savings account and accumulate INR 10 lakh or more during a fiscal year are required to notify the tax authorities.

For those holding current accounts, this reporting threshold is elevated to INR 50 lakh.

Reporting Entities: Financial Institutions like, Bank, Insurance agency, stock broker

Section 44AD/44ADA- Exempt form Penalties for cash deposit however deposit that are unrelated to business operations might attract the attention of tax department.

Section 68 of the Income tax act, 1961

The Income Tax Department holds the authority to issue notices under Section 68 of the Income Tax Act when individuals are unable to authenticate the source of their income.

Tax rate :60% tax + 25% surcharge + 4% cess

Other Cash Transaction Limits

?Transactions prevalent in the banking sector:

Cash deposit limit in Current Account

For current accounts, which are primarily used by businesses and enterprises for daily transactions, the cash deposit limit is often higher compared to savings accounts. This is because businesses deal with larger volumes of cash due to their operational nature.

However, specific limits can vary depending on the bank and the business’s financial activities. For example, the cash deposit limit in SBI for current accounts is 5 lakh to INR 100 crore per month. In HDFC it is 60 lakh or ten times the value of the current monthly balance (AMB), after crossing this limit the bank may charge some interest from the depositor.

Cash Transaction Limit

Apart from cash deposits, there are also cash transaction limits in place to regulate other types of financial activities. These limits are designed to track and monitor transactions that involve substantial amounts of cash. These transactions can include cash withdrawals, transfers, and payments. Cash transactions are restricted by Section 269ST and can only be up to INR 2 Lakh per day. All the banks have cash transactions below this value.

Cash Withdrawal Limit

Cash withdrawal limits exist to ensure that large cash withdrawals are reported to the relevant authorities. While these limits can vary between banks and account types, they are generally put in place to prevent illegal activities such as money laundering and tax evasion.

Cash Gift Limit

Income tax regulations also dictate the limit on cash gifts that can be given without incurring taxation. This is to prevent individuals from using cash gifts to evade taxes by disguising taxable income as gifts.

As per the existing tax regulations, not all gifts received within India are liable for taxation. The Income Tax Act of 1961 encompasses crucial provisions that facilitate the receipt of several gifts that are exempt from taxation.

For instance, if you happen to receive gifts or monetary fund’s amounting to INR 50,000 or less in a single financial year, you are not obliged to remit any gift tax.

Similarly, when you receive presents from sources such as your parents, spouse, siblings, or other immediate relatives including your in-laws, you are relieved from any tax obligations. This exemption from gift taxation remains applicable regardless of the value of the gifts received.

Fixed Deposit Limit

Fixed deposits, a popular investment option, also have specific rules regarding cash deposits. These rules dictate the maximum amount that can be deposited in a fixed deposit account, ensuring transparency and compliance.

Tax-saving fixed deposits offer a versatile investment opportunity with a minimum entry threshold of INR 100. On the upper end of the spectrum, investors can allocate up to INR 1.5 lakh per financial year into such deposits, thereby capitalizing on potential tax benefits.

Credit Card Bill Payment Limit

For credit card bill payments made in cash, there might be limitations in place to prevent the use of cash payments for settling extremely high credit card bills.

For Credit Card (VISA) bill payments through SBI, the prescribed per diem limit stands at INR 50,000, with an accompanying per transaction cap of INR 25,000, and HDFC is INR 49,000. The bill payment limit is more or less the same for all the banks.

Real Estate Transactions Limit

In real estate transactions, especially property purchases, cash is sometimes used for under-the-table deals. To counter this, there are limits on the amount of cash that can be transacted in real estate deals, ensuring that such transactions are properly documented and taxed.

In India, cash transactions related to real estate purchases are subject to strict regulations and limitations as part of the government’s efforts to curb black money and promote transparency in the real estate sector. The government has set a cash transaction limit for real estate transactions, beyond which the use of cash is prohibited.

It is Not Permissible to Purchase a Property Using Full Cash

The acquisition of a flat or any property using full cash is not permissible. Real estate transactions are bound by a cash transaction limit, and any transaction exceeding INR 20,000 in cash cannot be executed. As per Section 269SS of the Income Tax Act, receiving payments exceeding INR 20,000 in cash renders the seller liable for a penalty fee of 100%. This regulation, instituted by the Central Board of Direct Taxes (CBDT), has been in effect since June 1, 2015.

It is Acceptable to Record Cash Payments in the Sale Deed

Indeed, you can document cash payments as transaction evidence in the registered title deed. Nonetheless, it is crucial to ensure that any cash payment does not surpass the limit of INR 20,000.

Always bear in mind the stipulated cash transaction limit for property acquisitions and tailor your investment strategy accordingly.