Understanding Cash Deposit Limits in Savings Accounts Under Income Tax Regulations

Cash Deposit Limits for Savings Accounts in FY 2024–25: What You Must Know

If you're managing a savings account in India, especially with high cash activity, it's important to know the thresholds that could trigger reporting to the Income Tax Department. While depositing money into your own account isn’t illegal, certain cash transactions can draw attention from the tax authorities if they cross specific limits.

₹10 Lakh Annual Cash Deposit Limit – The Red Line

If the total cash you deposit into your savings account in a financial year (April to March) exceeds ₹10 lakh, your bank is required to flag it under Specified Financial Transactions (SFT) and report it to the Income Tax Department.

Important: This doesn't mean you owe tax on that amount right away. But you should be ready to explain the source of funds—whether from business income, property sale, gifts, or savings—if the IT Department asks.

₹50,000 Per Day Rule – PAN Is a Must

Any cash deposit over ₹50,000 in a single day into your account requires quoting your PAN number. Even if you deposit smaller amounts over time, the bank’s systems can aggregate these and still report you if the total goes beyond ₹10 lakh annually.

What About Current Accounts?

For current accounts, the reporting limit is higher. Cash deposits beyond ₹50 lakh in a financial year will trigger SFT filing. However, even here, daily cash deposits above ₹50,000 still require PAN disclosure.

Section-Wise Snapshot of Key Cash Rules

Here’s a simplified overview of how different tax provisions regulate your cash transactions:

1. Section 194N – TDS on Cash Withdrawals

If you withdraw over ₹1 crore in cash in a year (across all bank accounts), and you’ve been filing ITRs for the past 3 years, banks will deduct 2% TDS on the excess amount.

However, if you haven’t filed ITRs in the last 3 assessment years:

• 2% TDS applies above ₹20 lakh
• 5% TDS applies above ₹1 crore

2. Section 269ST – Limits on Cash Receipts

You cannot receive ₹2 lakh or more in cash from a person in a day or for a single event (like a wedding or property transaction). Violating this rule can result in a penalty equal to the amount received.

3. Sections 269SS & 269T – Loans and Repayments

Whether you're giving or repaying a loan, cash transactions over ₹20,000 are not allowed. Doing so may attract a penalty equal to the amount involved.

Other Notable Cash Limits

• Cash Gifts: You can receive up to ₹50,000 per financial year as a gift from a non-relative without it being taxed. Anything above that is added to your income.

  Gifts from close relatives (parents, siblings, spouse, etc.) are fully exempt from tax.

• Property Payments: You cannot pay over ₹20,000 in cash for any property purchase. The entire transaction must be handled via formal banking channels.

• Credit Card Bills (Cash Mode): Most banks won’t accept over ₹50,000 in cash per day toward your credit card dues, even though this isn't directly a tax law.

If You Cross the Limits, What Happens?

If your cash activity goes beyond what’s allowed:

• Your bank will report it.
• The Income Tax Department may send a notice asking for clarification.
• You’ll need to justify the source with proper documentation like sale receipts, withdrawal slips, or gift deeds.

Quick Summary Table (FY 2024–25)

Transaction	Limit	Applicable Rule
Annual cash deposit (savings account)	₹10 lakh	Rule 114B – SFT Reporting
Cash deposit per day (PAN required)	₹50,000	RBI KYC Norms
Single cash receipt (event/person)	₹2 lakh	Section 269ST
Cash loan or repayment (in/out)	₹20,000	Sections 269SS/269T
Cash withdrawal – ITR filed	₹1 crore	Section 194N (2% TDS)
Cash withdrawal – No ITR for 3 years	₹20 lakh/₹1 crore	Section 194N (2%-5% TDS)
Gift from non-relative (exempt limit)	₹50,000/year	Section 56(2)(x)

Practical Do's and Don’ts

• Always quote your PAN for deposits above ₹50,000.
• Avoid breaking large deposits into smaller ones—banks monitor cumulative totals.
• Use digital transfers or cheques for big payments, loans, or purchases.
• Keep documentary proof for every significant cash inflow or outflow.
• If you get a notice, respond with evidence, not silence.

Final Word

Cash transactions are still common in India, but the taxman is watching closely. The thresholds—₹10 lakh annual deposit, ₹2 lakh single cash receipt, ₹20,000 loan limit—are not arbitrary. They exist to discourage black money, tax evasion, and money laundering.