Income Tax: Income Tax Department sends notice on how much cash is deposited in the bank account, know the rules..

Income Tax Rule: You must also be wondering how much cash you can deposit or withdraw in your savings account to avoid scrutiny by the Income Tax Department. According to personal finance experts, the total cash deposit or withdrawal in your savings account in a financial year (April 1 to March 31) should not exceed Rs 10 lakh.

Additionally, receiving Rs 2 lakh or more in cash from a person in a day, whether it is a single transaction or multiple related transactions, is against the rules.

If you deposit more than Rs 10 lakh in cash in all your savings accounts combined, the bank will inform the Income Tax Department about it. This information will be given despite the transactions spread across different accounts.

What happens if more than Rs 10 lakh is deposited?

Abhishek Soni, CEO and co-founder of Tax2win, said, "If more than ₹ 10 lakh cash is deposited in your savings account in a financial year, then it is considered a high-value transaction. The bank or financial institution has to report it to the Income Tax Department, which is mandatory under Section 114B of the Income Tax Act, 1962. If you deposit more than ₹ 50,000 in cash in a single day, you will have to provide your PAN number. If you do not have a PAN, then Form 60/61 will have to be submitted."

According to Abhishek Soni, CEO and co-founder of Tax2win, "If more than ₹ 10 lakh cash is deposited in your savings account in a financial year, then it is considered a high-value transaction. Banks have to report it to the Income Tax Department, which is mandatory under Section 114B of the Income Tax Act, 1962. It is necessary to provide PAN numbers on depositing more than Rs 50 thousand in cash in a single day. If PAN is not available, Form 60/61 has to be submitted.

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How to respond to I-T notice?

If you get an income tax notice for a high-value cash transaction, you will have to submit sufficient documents to prove the source of your funds. Bank statements, investment records and inheritance documents are some of the documents that need to be submitted. If you are unsure or concerned about declaring the source of cash, consult an experienced tax advisor.

Ban on taking more than two lakh cash-

Under section 269ST of Income Tax, no person can receive more than ₹ 2 lakh in cash from another person. This restriction applies to transactions related to the same event/occasion, in aggregate, in a day.

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