Deposit cash in bank account? Are you on the income tax radar? Know these important rules

Nowadays we make most of the payments online, but still the use of cash has not stopped completely. Do you also deposit cash in your bank’s savings account? If yes, then you need to be careful, because depositing cash more than a limit can get you into trouble.

The government has made some strict rules to keep an eye on cash transactions and prevent illegal activities like black money. Let us understand these rules in simple language.

How much cash is deposited does the Income Tax Department know?

As per Income Tax rules, if you have accumulated Rs. 10 lakh rupees If you deposit cash or more than that, your bank automatically gives this information to the Income Tax Department. If you have a current account, then this limit 50 lakh rupees Is.

This does not mean that you will be taxed as soon as you deposit Rs 10 lakh. But, you come in the sight of the Income Tax Department and they may ask you about the source of this money.

Tax is deducted not only on deposit but also on withdrawal of cash (TDS).

Apart from depositing cash, the rule also applies to withdrawing excess cash.

• If you in one year 1 crore rupees If you withdraw cash more than Rs. 1000, the bank deducts 2% TDS on it.
• If you have not filed your Income Tax Return (ITR) for the last three years, the rules become even more stringent. In such20 lakh rupees 2% TDS is deducted only on withdrawal of cash more than Rs. 1 crore rupees If more is taken out then it goes up to 5%.

The good thing is that you can claim back this deducted TDS while filing your ITR.

Fines up to 100% may be imposed on these mistakes

• Avoid taking cash more than Rs 2 lakh: You cannot take Rs 2 lakh or more in cash from a single person, in a single day, or for a single transaction. If you are caught doing this, you may have to pay a fine of the same amount.
• Do not take loan of more than Rs 20,000 in cash: According to the rules, you can neither take a loan of more than Rs 20,000 in cash nor repay it in cash. Breaking this rule can also result in heavy fines.

What will happen if we are unable to account for the money?

This is the most dangerous situation. If the Income Tax Department asks you for an account of the money deposited in your account and you are not able to prove where this money came from, then that amount will be considered as your undisclosed income.

In such a situation, on that money 60% tax, 25% surcharge and 4% cess may seem, which overall about 84% It happens. This means that if your account of Rs 10 lakh is not received, then you may have to pay Rs 8.40 lakh as tax.

Therefore, it is better to use banking channels for large transactions and keep track of all your money properly.