How Much Cash you can Deposit in Bank Per Year? Know the Rules

Depositing cash in a savings account is a common process, but did you know that if you deposit cash beyond a certain limit, the bank directly reports it to the Income Tax Department?
If you are also frequently depositing large amounts of cash into your account, then it is very important to have accurate information about bank and tax rules. Go through this article and know how much cash you can deposit in bank per year.

How Much Cash you can Deposit in Bank Per Year?

The main objective of the government and the Income Tax Department is to monitor large cash transactions and prevent activities like unaccounted income, tax evasion, and money laundering. As per the current income tax rules, if an individual deposits a total of Rs 10 lakh or more in one or more of their savings accounts in a financial year, it is mandatory for banks to report the same to the Income Tax Department. Also, note that this limit is not applicable to any specific transaction, but to the total amount of all cash deposits made throughout the year.

However, depositing more than Rs 10 lakh in cash does not mean that you will get a tax notice immediately. If you have a proper account and valid source of the money deposited, then there is no need to worry.

How Much Tax to Pay Depositing More Than Rs 10 Lakhs in Cash Per Year?

• There is no direct tax on depositing money in a bank account. However, if any cash deposit touches the prescribed limit of Rs 10 lakh, then you may have to provide proof of the source of the amount. If the money comes from your salary, business, rental income or agricultural income and you have declared it in your Income Tax Return (ITR), then there will be no problem.

• If you are depositing more than Rs 50,000 in cash in a day in any bank, then it is mandatory for you to provide your PAN card number. If you do not have a PAN number, then you have to fill up Form 60 and deposit it. The main purpose of this rule is to maintain a record of cash transactions.

Always keep proof of income such as salary slips, business sales records, rent agreements, or land sale documents when making large cash transactions, so that you can easily answer questions from the department if questioned.

Under Section 269ST of the Income Tax Act, you cannot accept cash of ₹2 lakh or more from a person in a single day, in respect of a single transaction, or in relation to a single event or occasion. If a person violates this rule, then a fine equal to the amount of cash received (100 percent) can be imposed on him.

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