Cash Deposit Limit in Savings Account

Every bank offers a savings account, with the minimum balance requirement of some being as low as zero. However, RBI has set some guidelines on the accounts by which accounts will have an upper threshold or a cash deposit limit for the savings account, past which you might encounter additional documentation or attract inspections.

This is an important consideration when opening a savings account, as it can help you avoid tedious documentation or unnecessary penalties.

Read more to learn about the cash deposit limits of your savings account, income tax rules, and tips to avoid penalties.

Table of Contents:

• ⇾ Maximum Cash Deposit Limit in a Savings Account
• ⇾ Current Accounts
• ⇾  Fixed Deposit
• ⇾ Credit Cards
• ⇾ Types of Transactions Included in the Deposit Limit
• ⇾ Rules for Large Cash Deposits in Savings Accounts
• ⇾ Income Tax Rules for Cash Deposits in Savings Accounts
• ⇾ 1. Section 269ST
• ⇾ 2. Section 114B
• ⇾ 3. Section 194N
• ⇾ Reporting Cash Deposits to Income Tax Authorities
• ⇾ Tips for Managing Large Cash Deposits
• ⇾ Frequently Asked Questions

Maximum Cash Deposit Limit in Savings Account

In India, there is no limit to the amount of money you can keep in your savings account, as long as you have a legitimate source. However, depositing this money has certain limits, after which you would require PAN details and can attract the attention of income tax authorities.

RBI Guidelines and Income Tax Regulations suggest a maximum of ₹50,000 per day, without PAN submission or scrutiny. However, the maximum limit stays at ₹2 lakhs per person, per transaction.

The maximum limit for deposits in savings accounts for individuals, in a financial year, is limited to ₹10 lakhs.

However, this is only applicable to savings accounts for individuals.

Current Accounts Cash Deposit Limit

Current accounts are mostly used by businesses and corporations, and they have higher limits compared to typical savings accounts.

Their limits are subject to the bank and the type of organisation. However, any amount above ₹50 lakhs is subject to scrutiny.

Fixed Deposit Cash Deposit Limit

Similar to savings accounts, fixed deposits have no limits on how much amount you can keep in one. However, there will be tax charges past certain limits for your returns.

It is best to keep a threshold of ₹1.5 lakhs deposit per financial year to avoid taxation.

Credit Cards Cash Deposit Limit

Credit cards have a much stricter policy related to deposit limits, imposed by the RBI.

Any bill payments above 1 lakh will be reported by the bank. Any card dues worth more than ₹50 lakhs that are paid in 1 financial year are also subject to scrutiny and penalties if the customer fails to submit demanded documents.

For credit cards, there is also a UPI limit on deposits, with that being ₹20,000 per deposit. The limits can be different depending on the banks in the case of net banking.

Types of Transactions Included in the Deposit Limit

As per RBI guidelines and income tax regulations, the banks track certain types of transfers from your account under the deposit limit. This includes both cash and non-cash deposits, monitored for tax implications. The major monitored transaction types are:

1. Cash withdrawals: Almost all banks have a daily withdrawal limit, especially at ATMs, which may differ according to the bank and account type.
2. Bank Branch Deposits: Many banks offer a charge-free deposit service as long as the transaction stays under the set frequency or cash limit.
3. Cash Deposit Machines: Although variable with banks, CDMs often have a cash deposit limit and are considered one of the most customer-convenient methods for cash deposits.

Apart from these, certain other types of deposit methods could also be included, like

• Third-party cash deposits
• Cheque deposits
• Online transfers/net banking
• UPI transactions
• Foreign currency deposits/exchange

Rules for Large Cash Deposits in Savings Accounts

As per RBI and income tax rules, the following are the limits for savings accounts, in terms of deposits:

1. The maximum amount of money one can deposit without scrutiny is ₹50,000 per day.

Past this limit, account holders must submit PAN details.

2. The maximum deposit limit for individuals per transaction, per day, is ₹2 lakhs.
3. The maximum deposit limit for senior individuals is ₹5 lakhs.

Past this limit, account holders are subject to a 100% penalty under the Income Tax Act, Section 269ST.

4. The maximum deposit limit for individuals per year is ₹10 lakhs.

In case of an active investigation, the amount below the limit is considered household savings, and only the amount post the limit is subject to scrutiny.

Income Tax Rules for Cash Deposits in Savings Accounts

The Income Department introduced the Income Tax Act in India with the primary motive of structuring the taxation system, which promoted financial transparency and curbed tax evasion.

Various tax rules are applicable for cash deposits in savings accounts:

1. Section 269ST

This limits the transaction amount and makes the financials more manageable. The rule means you cannot receive an amount more than ₹2 lakhs or more under the following conditions:

1. Single Transaction: You cannot receive an amount equal to or more than ₹2 lakh per transaction.
2. Single day: You cannot receive ₹2 lakh or more in cash from one person in a single day.
3. For one event or occasion: If the total cash received for a single event like a wedding, property sale, or business deal exceeds ₹2 lakh, it is not allowed.

Violation of this rule can result in a penalty of 100% of the amount deposited, which is essentially the whole amount itself.

This is certainly helpful in

• To reduce cash-based transactions and encourage digital payments.
• To prevent tax evasion and ensure that large sums of money are legally accounted for.
• To stop unreported business deals or property transactions where people try to avoid paying taxes.

2. Section 114B

This rule compels banks or financial institutions to report to the Income Tax Department if an individual deposits equal to or more than ₹10 lakhs in cash in one year across one or more savings accounts.

This is very helpful in

• Track large cash transactions and prevent tax evasion.
• Ensure people with high incomes pay the correct taxes.
• Helps monitor suspicious financial activity.

3. Section 194N

This rule is related to cash withdrawals, as it is also considered a transaction from your savings account. This is applicable when a person or business withdraws a large sum of money from a bank in a financial year.

For regular taxpayers (individuals who file ITR), a 2% TDS is applied if the withdrawal amount exceeds ₹1 crore in a financial year.

For non-filers of ITR (those who haven’t filed tax returns for the last three years),

• 2% TDS will be deducted for cash withdrawals exceeding ₹20 lakh in a financial year.
• 5% TDS will be deducted for cash withdrawals exceeding ₹1 crore in a financial year.

The goal of introducing this rule was the same as Section 114B, just as another source of ensuring the taxes were paid.

The deducted TDS can be claimed as a tax credit when filing an ITR.

Reporting Cash Deposits to Income Tax Authorities

Firstly, let’s go through the deposit limits for better understanding. Following is the general summary of limits for deposits.

SFT-005 is a reporting mechanism under the Income Tax Act, where banks and financial institutions must inform the tax authorities about large deposits.

Once the report is submitted under SFT-005, the CBDT (Central Board of Direct Taxes) takes action based on the complaint. They check if:

• The deposits match your declared income.
• If There Is a Mismatch in Your Income and Deposits
• If Deposits Are Unexplained or Suspicious

For any suspicious activity registered or undisclosed income, a penalty of 50% to 200% of the tax amount can be levied.

Tips for Managing Large Cash Deposits

Although all this might seem scary, certain steps can be taken to avoid mistakes that most often people face when handling large amounts of money without knowing the rules and regulations.

Here are some tips to keep in mind when handling large amounts of money:

1. Always keep proof of cash deposits.
2. Use PAN when making large transactions
3. Keep your deposit limits in check.
4. File ITR at proper intervals.
5. Claim TDS if applicable
6. Distribute large cash deposits over time.
7. Use digital transactions instead of cash.
8. If you are a non-taxpayer, use Form 60/61.
9. Consult a tax professional.