How much cash can you keep in the bank? Do not come in the eyes of the Income Tax Department!

Many of us often think whether the bank has a fixed limit to deposit or withdraw cash, which may be sight of the Income Tax Department. This is a very common question. Frankly, to keep money in the bank No fixed upper limit Not there. No matter how much money you can keep in the bank. However, the important thing is that the Income Tax Department on some special and large financial transactions keeps track And sets the limits of reporting on them. This means that if your bank account has a cash transaction of more than a certain limit, then the bank or financial institutions will directly inform the Income Tax Department.

If you do not have a legitimate and correct account of that cash, then you can come under the scrutiny of the Income Tax Department and you may have to face serious consequences. Let us know which transactions the Income Tax Department keeps an eye on and what are the rules related to them.

Income tax department’s sharp eye: These transactions are on radar!

The Income Tax Department wants to have transparency in the economy and control black money. For this, he has made a rule to share information about transactions above some fixed limits at various financial institutions, which are reported in ‘Statement of Financial Transaction’ (SFT) or ‘Annual Information Statement’ (AIS).

Major boundaries of cash transactions whose banks report:

1. Cash Deposits in Savings Account:

   • If you have one or more savings accounts Total ₹ 10 lakh or more in a financial year If the cash is deposited, then the bank will inform the Income Tax Department.

2. Cash Deposits in Current Account:

   • If in your current account Total ₹ 50 lakh or more in a financial year If the cash is deposited, then it is also reported.

3. Cash withdrawals:

   • Cash withdrawal is also monitored on a large scale. In some situations, such as under Section 194N associated with 26A/TDS, banks cut TDS if a person has not filed an ITR for the last 3 years and withdraws more than 1 crore cash. However, banks can report large cash withdrawal anyway, especially if they are regularly.

4. Fixed Deposits – FDS:

   • If you in one or more FD ₹ 10 lakh or more cash Let’s submit (whether at one time or in installments), the banks also inform the Income Tax Department.

5. Credit Card Payments:

   • If you pay your credit card bills ₹ 1 lakh or more If you do in cash, then banks report it.

6. Purchase of Shares, Mutual Funds, Debants, Bonds):

   • If you in a financial year ₹ 10 lakh or more If you invest in them using the amount of, then the companies/registrars will give information about it.

7. Purchase or sale of immovable property:

   • ₹ 30 lakh or more All transactions related to the purchase or sale of real estate are reported to the Income Tax Department by the Property Registrar. This includes both cash and bank transactions.

     
     

So what if I cross these boundaries?

If your cash transaction crosses the boundaries mentioned above, the banks or financial institutions send its report to the Income Tax Department. after this:

1. Matching information: The Income Tax Department will match this information related to your PAN card with the income given in the Income Tax Return (ITR) filed by you. You can check your AIS (Annual Information Statement) or TISPAYER Information Summary on the Income Tax Portal and see which big transactions in your name are with the department.

2. Income tax notice:

   • If the cash deposited in the bank does not match your declared income, then the Income Tax Department can send you notice.

   • You will be asked about the source of those cash transactions, and you have to explain them with valid proof.

3. Penalties and punishments:

   • If you are unable to give satisfactory explanation of the cash source, the Income Tax Department may consider it a “unexplained income”.

   • On this unaccounted income Fines from 100% to 200% Can be imposed, which will be in addition to your tax liability.

   • In some serious cases (where there is a case of big tax theft) Prosecution or jail sentence There may also be a provision of.

How to protect and what to keep in mind?

• File income tax returns (ITR): Declare all your income (salary, business, capital profit, rent etc.) honestly in income tax returns every year.

• Keep transactions records: Always keep a record of source and purpose for large cash deposits or withdrawal. Show that money is earned in legitimate ways (eg property sales, old investment, gifts).

• Avoid cash, adopt digital: Where possible, use digital methods such as checks, NEFT, RTGS, UPI or bank transfer for large transactions. This makes your transaction transparent.

• Avoid small deposits together: Avoid ‘Smurfing’ (ie a large amount to be divided into several small parts and submitting it in different accounts or on different dates), as it is seen as suspicious behavior.

• PAN card mandatory: It is mandatory to present your PAN card for any cash transaction of ₹ 50,000 or more.

• Take advice: If you have a large amount of cash or plan to do large transactions, always consult a Chartered Accountant.