Comprehending Income Tax Laws Concerning Savings Accounts
 
A lot of people are curious about the maximum amount of money they may put into their savings account without drawing the notice of the Income Tax Department.  Tax laws stipulate that a savings account's total cash deposits and withdrawals over a fiscal year cannot exceed ₹10 lakh.  The tax authorities may investigate if this level is exceeded.

Daily Cash Transaction Limits
The amount of money that can be exchanged in a day is another frequent worry.  No individual may withdraw more than ₹2 lakh in cash in a single transaction or via related transactions in a single day, according to Section 269ST of the Income Tax Act.  Furthermore, banks must notify the Income Tax Department of all transactions involving cash deposits exceeding ₹10 lakh in all savings accounts throughout a fiscal year, even if the monies are dispersed among several accounts.
 
What Happens if You Exceed the ₹10 Lakh Limit?
A high-value transaction involves a cash deposit of more than ₹10 lakh throughout a fiscal year.  Banks and other financial institutions are required to report such transactions to the Income Tax Department by Section 114B of the Income Tax Act.  Additionally, the depositor is required to present their PAN (Permanent Account Number) if their cash deposit exceeds ₹50,000 in a single day.  If they lack a PAN, they must instead submit Form 60/61.
 
How to Respond to an Income Tax Notice for High-Value Transactions
If the Income Tax Department notifies you of high-value cash transactions, you will need to present enough documentation to support the money's origin. Acceptable documents include:
 
Bank statements
Investment records
Documents related to inheritance
For individuals unsure about their cash sources or how to respond, consulting a tax advisor is highly recommended.

Key Takeaways:

• If cash deposits or withdrawals total more than ₹10 lakh throughout a fiscal year, income tax scrutiny may result.

 • Section 269ST prohibits cash withdrawals of ₹2 lakh or more per day.

 • High-value transactions, which include deposits above ₹10 lakh yearly, need to be notified to the Income Tax Department.

 • A PAN number must be submitted for a cash deposit of at least ₹50,000 in a single day.

 • Make sure you have the right paperwork to support the source of cash if you receive an income tax notice.
 
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SIBY JEYYA

25/02/2025 09:51 AM