If the balance shown in the account is more than this, then you may get an income tax notice, here are the rules..

You deposit money into your account and continue to do so. But did you know that your account is constantly monitored by the Income Tax Department? If the amount in the account exceeds a certain limit, the department can send a notice. Let us explain all the details about the maximum deposit.

A recent case related to this has come to light. In a significant decision, the Income Tax Appellate Tribunal (ITAT) in Delhi dismissed a six-year-old case related to a large bank transaction that had come under the tax department's scrutiny and escalated into a full-blown tax battle.

The trouble began when a taxpayer deposited ₹8.68 lakh into his bank account and received a notice from the Income Tax Department. Initially, the tax officer considered the matter a simple "limited investigation," an assessment intended only to confirm the source of the deposited cash.

What was the decision?

However, during the proceedings, the assessing officer in the case decided to take the matter a step further and initiated proceedings under Section 44AD of the Income Tax Act, treating it as presumptive business income. This section treats the amount in question as business profits. Kumar took the matter to the Commissioner of Income Tax (Appeals), or CIT(A), but his case was dismissed. Undeterred, the taxpayer approached the Income Tax Appellate Tribunal (ITAT) and finally prevailed on September 22, 2025. The ITAT ruled that such an extension is legally unacceptable. However, this case highlights the adverse consequences of depositing large amounts of cash in your bank account. Here's how you can avoid a tax notice on bank deposits.

Are bank deposits taxable?
Cash deposited in your bank account is generally not taxable, but such transactions are among the most concerning, as they often indicate the accumulation of unaccounted funds in the formal financial system. Banks and cooperative banks are required to report to the Income Tax Department any deposit of ₹10 lakh or more during a financial year. This limit applies cumulatively to all accounts linked to the taxpayer's PAN. If you deposit unusually large amounts of cash into your bank account, you are likely to receive a notice from the Income Tax Department. The tax department is entitled to investigate the source of the deposit, and you must write a response to the tax officer detailing the transaction.

Stay Safe
If you want to avoid a tax notice on bank deposits, it's best to stay within the limit. Even if you deposit large amounts, you should keep documents explaining the transaction ready so you can easily respond to the tax officer if you receive a notice. If you receive a notice, you must explain the transaction to avoid legal trouble.

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