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Cash Deposit Limit: A bank account is for managing your money. You keep depositing and withdrawing money in it. However, your bank account is bound by many rules. If there is any mistake in it, you may have to pay up to 60 percent tax.
Actually, according to the Income Tax Department, if you deposit cash in your account and fail to disclose the source of income, you will be charged a heavy tax, which includes 25 percent surcharge and 4 percent cess. So let us introduce you to the rules for depositing cash.
60% tax payable
According to Section 68 of the Income Tax Act, the Income Tax Department has the power to impose 60 percent tax by issuing a notice for not disclosing the source of income. Remember, the government is constantly trying to make people use cash as little as possible. Efforts are being made to prevent money laundering, tax evasion and illegal financial activities by imposing cash deposit limits in savings accounts.
Cash deposits of more than Rs 10 lakh will have to be reported
According to the Income Tax Act, if you deposit more than Rs 10 lakh in cash in a savings account in a financial year, you have to inform the tax authorities. In a current account, this limit is Rs 50 lakh. However, it is important to know that there is no immediate tax on cash deposits above the limit. Also, if you are successful in giving the correct information, then you will not have to pay any tax.
2% TDS on withdrawals above Rs 1 crore
Section 194N of the Income Tax Act states that 2% TDS will be deducted if the withdrawal from a bank account exceeds Rs 1 crore. However, if you have not filed ITR for the last 3 years, you will have to pay only 2% TDS on withdrawals above Rs 20 lakh and 5% TCS on withdrawals above Rs 1 crore.
