There are certain cash transaction limits in banks which if you do not follow may attract income tax up to 60% on those cash transactions. So, it is important to know about those cash transaction limits in order to avoid unwanted tax deductions.
This is what you are going to learn
Cash transaction limit in banks.
There are around 11 high value transactions which are reported by banks to income tax department on regular intervals and income tax department keep eye on these transaction. After complete scruntining of each high value transaction and comparison with old income tax detail you may be asked by income tax department regarding any particular cash transaction.
11 high value transactions noticed by income tax department.
- Cash deposit aggregating to rupees 10 lakh or more in a month .
- Cash purchase of demand drafts and pay orders aggregating to rupees 10 lakh and above.
- Fixed deposits above rupees 10 lakh.
- cash deposit and withdrawal above 50 lakh in current accounts.
- credit card expenses above 10 lakh rupees.
- credit card cash payments up to 1 lakhs rupees.
- Investments made in shares and mutual funds up to 1 lakh rupees.
- Investment in debentures and bonds up to 10 lakh rupees.
- Purchase of foreign currency up to 10 lakh rupees.
- Purchase of immovable property where stamp duty paid is more than 30 lakh rupees.
- Cash received up to 2 lakh and more against sale of goods and service.
|If your transaction is genuine and you have legal source of income and you can explain/ prove income tax department about the genuineness of your income then you need not to worry about any off these transactions|
Cash transaction limits reported by banks.
- All cash transactions of more than 10 lakh rupees or all series of cash transactions integrally connected to each other aggregating to 10 lakh rupees in a month are reported by bank to Financial intelligence unit.
- All suspicious transaction which bank notice unusually may get reported.
- All cash deposit transactions where counterfeit currency if found and all transactions where valuable security or documents are forged.
|Do almost all your heavy cash transactions through transfer mode it will help you to keep track of your transaction and this will keep you far from income tax explanations.|
Cash deposit limit in bank
Cash depositors are the major stakeholder of the banking industry and banks are bound to make policies which will not restrict its customer from depositing any amount in bank but there are some types of account in which there are some restrictions/ cash deposit limits on number deposits and on amount of deposit.
Cash deposit limit in saving bank accounts
Saving banking accounts, as the very name suggest is intended for saving for the future. There are no restrictions on the number and amount of cash deposit limit in saving bank accounts that can be made on any day.
In saving bank accounts if you have submitted your pan card with bank you can deposit any amount into your account but if you are depositing heavy amount in cash which in totality aggregates up to 10 lakh rupees in a month then it may be reported by bank to income tax department.
Single cash deposit of amount more than 2 lakh rupees may also get reported under suspicious transaction and income tax department may ask for an explanation regarding source of funds.
|Minimum amount of deposit is rupees 10/-.|
Cash deposit limit in small saving account (BSBD A/C)
Small saving accounts are no frill accounts or accounts in which there is no minimum balance requirement. These account require minimum KYC documents and are restricted to certain cash deposit limits.
In these type off accounts you can usually deposit only 5000 rupees by cash in a single transaction and in a year total deposit should not aggregate more than150000 rupees. Balance at any point of time does not exceed rupees 50000/ in small saving bank accounts
If these limits are not maintained by account holder than it will by default get converted into general saving account.
|Small saving accounts are opened under financial inclusion system in order to make saving habits in rural area. Government provide various aid to the account holders through these small accounts ( Jan Dhan accounts) and these accounts are opened with reduced KYC documents|
Cash deposit limit in current account
Current accounts are opened for doing regular and frequent cash transaction as their are no restrictions on number and amount of deposits. In current account you can deposit as much amount as you want and as many time as you wish.
|Bank may pass your account information to income tax department but as soon as all transaction are genuine and have some proof of sourcing you need not to worry.|
Cash withdrawal limit
Cash withdrawal limit is different for different types of accounts and for different type of cash withdrawal instruments. We have cash withdrawal limit in saving banks accounts, BSDA small saving accounts, and current accounts.
Cash withdrawal limit in saving account
saving bank accounts are designed for the purpose of saving and hence you can deposit amount in these account as much time as you want irrespective of amount ( with pan) but Individual banks have certain cash withdrawal limits. Like you can withdraw some specific amount of cash with a particular instrument.
usually you can withdraw up to any amount from base branch if you are taking self withdrawal from bank branch. If you are sending some to collect money than with cheque any amount can be withdrawn and with withdrawal slip third party payment is restricted to 5000.
At non home base branch you can only withdraw cash with Cheque and that to with upper limit up to 50000 cash withdrawal limit.
|You can transfer any amount to your account at home branch and at no home branch. There is only cash transaction limit in banks but for transfer transactions there is no limit.|
Cash withdrawal limit in small saving account (BSBD A/C)
In small saving bank account there are certain cash transaction limits usually account holder will be allowed a total of 8 withdrawals in a month with a cap of four withdrawal from branch and four from ATM machine.
|Usually can not even withdraw more than 10000 rupees in a single cash withdrawal transaction.|
Cash withdrawal limit in current account
In current account there are no as such cash withdrawal limits but, in current account you can only do cash withdrawal transaction with cheque. Current account holder can withdraw or deposit amount in there account as many times as they want.
|Cash withdrawal allowed only through cheque, no withdrawal from withdrawal slip is allowed in current accounts.|
You can check individual banks deposit policy on there official website
- see:- Deposit policy of banks for more details on cash transaction limits in banks
Also read :
Frequently asked questions on cash transaction limit in banks
Can I deposit 10 lakhs in bank?
Yes, you can deposit 10 lakh rupees in your bank account there is no as such cash transaction limit. But this is a suspicious transaction so, it may get attention of income tax department and you have to produce valid and documented proof of this amount.
Minimum cash deposit limit which banks report to income tax is 10 lakh rupees.
What happens if I deposit a large amount of cash?
you can deposit as much amount as you wish in your account but if amount if more than 2 lakh in a single cash transaction and is aggregating to more than 10 lakh in a month. Than this is not under cash deposit limit and these transactions may get reported to income tax department.
Income tax department compares your ITRs ( with previous return ) and if every thing fits well than your transactions are considered safe but if thing are not good than income tax department will ask for an explanation from you.
If you fails to justify the source of funds you will be taxed up to 60%
How much cash can I withdraw from the bank?
You can withdraw any amount from banks but it is advised to withdraw below two lakh in cash as cash withdrawal limit under this is safe and may be left out of suspicious transaction.
How much can I withdraw from ATM?
Cash withdrawal limits are different from bank to bank and also varies with type of card you have.
Generally cash withdrawal limit in saving account ranges from 25000 to 40000