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RBI Cash Deposit Rules: It is evident today that bank accounts have become a necessity for individuals. To ensure the safety of monetary resources, most Indians prefer having a savings account with the bank. There seems to be no limit to the number of savings accounts any particular individual can have, whether they are a student, employed or even a self-employed businessman. Particularly for cash based businesses and self-employed individuals, depositing cash in savings accounts is a common and mundane task.
What Sitting Amount is Permitted in Savings Accounts?
But does anyone ever ask or think as to what would the optimum amount to deposit and sit in these accounts be? It is said that most individuals deposit funds on a routine basis but are oblivious to some critical societal rules of RBI and Income Tax. In all likelihood, you may unwittingly deposit cash that puts you in line for an advisory notice regarding the Income Tax.
Are you aware of the limit when it comes to maintaining the balance of a savings account?
Let us tell you that If you are making frequent large cash deposits, it could catch the attention of the Income Tax Department. By knowing the RBI’s fixed limit and the Guide regarding tax rules, you could avoid an investigation or an unnecessary fine. So let us tell you the noteworthy policies related to the saving accounts which are crucial for you.
The Limit of Maintanance Balance of a Savings Account
Both the Income Tax Department and the Reserve Bank of India (RBI) monitor transanctions of higher value. If anything above 10 lakh INR is deposited in a savings account in a financial year, there is a need for the bank to inform the tax office through an Annual Information Return (AIR). We want to make this clear that there is no need to be overtly concerned. It will not result in more taxes should an account holder cross this spending threshold; however, should a spending threshold be crossed where there has been little income recently declared, there may be further scrutiny.
Are there restrictions when opening a current account?
One thing we can inform you is that the amount that can be deposited in a current account is larger. For the current account, the limit for deposit during a financial year is 50 lakh INR.
For what types of transactions is a PAN necessary?
For s single transaction involving cash of fifty thousand rupees or above, a PAN would be needed. Also, If an individual is putting money in a bank account in smaller amounts, say, below fifty thousand rupees but cumulatively in a financial year it exceeds a certain threshold, then it could potentially be probed by the tax authorities particularly, when it is in excess of the declared taxable income.
What is the outcome of crossing the limit?
Government can put you through the wringer and claim authority under somewhat without justification sub sections 131, 142 (1) or 148. In case you are not able to defend clearly where these sums turn up, the sum would be deemed as not accounted for and charged with income tax on undisclosed income @ 60% u/s 68 + surcharge & cess.
Form 26AS or AIS and your cash deposits
All the banking activities at the top of the bracket of ‘high value’ done by any of our banks on your behalf, can be seen in blatantly straightforward form called 26AS or the newer AIS(Annual Income Statement). These are the records that would be served served either to the income tax authorities or procured from other government agencies to look at user filed income tax returns and do not match then, notice could be issued.
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