Income Tax: Want to avoid an Income Tax Notice? Then learn these rules before depositing cash in the bank..

These days, almost everyone has one or more bank accounts. People have been keeping their hard-earned money and savings in bank accounts for years. People usually keep money for their daily expenses, savings, and needs in the bank. But did you know that the Income Tax Department keeps an eye on the money in your bank account and the transactions that take place? Yes, you should know that if more money than the prescribed limit is deposited in your account and the department doesn't receive a proper explanation for it, then you are bound to receive an income tax notice.

People often wonder how much money is safe to keep in a bank account, and at what point the tax department might start asking questions.  According to RBI and Income Tax rules, simply keeping or depositing money in a bank doesn't directly attract tax, but if the amount is very large and the source of the money is not clear, then it definitely raises suspicion.

How much money is safe to keep?

Depositing a large amount of cash in a bank account can be risky.
Deposits of Rs. 10 lakh or more in cash in a year can attract attention.
Banks provide this information to the Income Tax Department.
This rule is not limited to just one account.
The calculation is done by combining all bank accounts linked to your PAN.
Remember that dividing the money into different accounts doesn't exempt you from the rules.
A tax notice may be issued for large cash deposits.

When will inquiries be made?
A sudden large cash deposit in a bank account can raise questions.
The Income Tax Department may ask for the source of the money.
Proof of salary, business income, or property sale may need to be provided.
Gifts or other legitimate sources may also need to be disclosed.
If you have the correct documents, there is no need to worry.

What are the Income Tax Department's rights?
There is no direct tax on depositing cash in the bank.
However, large cash deposits come under scrutiny.
The Income Tax Department keeps a close watch on suspicious transactions.
The department may send a notice if needed.
Caution is always necessary in cash transactions. Never ignore these things:
To avoid tax notices, you should follow the rules.
Always keep your cash transactions within the prescribed limits.
As far as possible, conduct large transactions digitally or through bank transfers.
Always clearly state the reason before making cash deposits.
Keep all documents related to large transactions safe.
Transparent transactions prevent problems.

What to do if you receive a tax notice?
If you receive an income tax notice, do not panic.
Always respond on time with accurate information.
Presenting the correct documents will clarify the matter.
Always maintain clear and transparent transactions.
Following the rules protects you from tax problems. (Note: This news is based on general information; for more information, please consult a financial advisor.)

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