What is the Cash Deposit Limit in Savings Accounts?
The cash deposit limit in a savings account refers to the maximum cash an individual can deposit without raising concerns from the tax authorities. This regulation aims to monitor significant cash transactions and curb activities such as tax evasion and money laundering.
Key Limits for Savings and Current Accounts
- Savings Accounts: Deposits totaling INR 10 lakh or more in a financial year must be reported to the Income Tax Department.
- Current Accounts: For businesses and enterprises, the threshold is higher at INR 50 lakh per year.
Note: While these deposits are not immediately taxed, banks are required to report them to tax authorities.
Tax Deduction on Cash Withdrawals (Section 194N)
The Indian Income Tax Act governs cash withdrawals through Section 194N, with specific rules for Tax Deducted at Source (TDS):
- Withdrawals exceeding INR 1 crore in a fiscal year: TDS at 2%.
- Withdrawals over INR 20 lakh (for individuals not filing ITR for the past three years):
- 2% TDS on amounts above INR 20 lakh.
- 5% TDS on amounts exceeding INR 1 crore.
The TDS deducted can be claimed as a credit when filing income tax returns (ITR).
Penalties on Cash Transactions (Section 269ST)
Section 269ST restricts cash receipts of INR 2 lakh or more in a single transaction or a financial year. Violations attract a penalty equal to the amount received. However, this limit does not apply to cash withdrawals from banks.
Cash Loan Restrictions (Sections 269SS and 269T)
These sections impose strict regulations on cash loans:
- Accepting or repaying cash loans above INR 20,000 is prohibited.
- Violations attract penalties equal to the loan amount.
Other Cash Transaction Limits
1. Cash Deposits in Current Accounts
Current accounts used by businesses have higher deposit limits, varying by bank:
- SBI: INR 5 lakh to INR 100 crore/month.
- HDFC: INR 60 lakh or 10x the monthly balance.
2. Cash Withdrawal Limits
Banks enforce withdrawal limits to monitor substantial transactions:
- A cumulative withdrawal of INR 1 crore from multiple accounts across different banks is allowed without incurring TDS.
3. Cash Gift Limits
Tax exemptions are applicable for gifts:
- Cash gifts up to INR 50,000/year are tax-free.
- Gifts from immediate relatives (parents, spouse, siblings) are exempt, irrespective of the amount.
4. Fixed Deposit Limits
Tax-saving fixed deposits have specific thresholds:
- Minimum deposit: INR 100.
- Maximum deposit: INR 1.5 lakh/year for tax benefits.
5. Credit Card Bill Payment Limits
Cash payments for credit card bills are capped:
- SBI: INR 50,000/day (INR 25,000 per transaction).
- HDFC: INR 49,000/day.
6. Real Estate Transaction Limits
Regulations prohibit full cash payments for property purchases:
- Cash payments exceeding INR 20,000 in property deals attract a penalty under Section 269SS.
Important: All real estate transactions must comply with transparency and documentation requirements to curb black money.
How Cash Deposits Are Taxed
The Income Tax Department monitors unexplained cash deposits under Section 68. If the source of income cannot be verified:
- Tax at 60%, along with a 25% surcharge and a 4% cess, may be levied.
However, deposits aligning with declared business turnover under Sections 44AD/44ADA are exempt from penalties.
Summary Table of Key Limits and Penalties
| Transaction Type | Threshold | Penalty/Tax |
|---|---|---|
| Savings Account Deposits | INR 10 lakh/year | Reported to IT Department |
| Current Account Deposits | INR 50 lakh/year | Reported to IT Department |
| Cash Withdrawals (Section 194N) | >INR 1 crore/year | 2% TDS |
| Cash Gifts | INR 50,000/year | Tax-free |
| Property Transactions (Section 269SS) | >INR 20,000 | 100% penalty on the transaction |
| Cash Loans (Section 269SS/269T) | >INR 20,000 | Penalty equal to loan amount |
| Credit Card Bill Payments (Cash) | INR 50,000/day (varies) | Limits depend on the bank |
CA Study Shop provides classes & books for CA CS CMA Students. We have partnered with more than 100 top faculties of country and provide excellent customer support which is evident from our 4.9/5 star rating on Google. Student can connect with us via any mode here.
Best of luck!
Stay Connected for more authentic updates.
Jai Hind,Vande Mataram
Team CA Study
