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If your salary is more than a certain limit, then you have to pay tax. The Income Tax Department can take action against you for not paying tax. But the Income Tax Department not only keeps an eye on your income, but also on your transactions. The Income Tax Department also keeps an eye on how much you are depositing from your savings account every day and every year.
RBI has put a limit on the deposit amount. You can deposit Rs 10 lakh in your savings account within a year without anyone monitoring it. But as soon as you exceed this amount, the bank immediately informs the Income Tax Department. You may get a notice from the department. You do not necessarily have to pay tax on this but you will be asked the source of this money.
What if you can't cite the source?
If an account holder is unable to tell where the money came from, the Income Tax Department can recover the amount from the account holder by imposing 60 percent tax, 25 percent surcharge and 4 percent cess on that amount. Let us tell you that the Income Tax Department has set a limit not only for a year but also for one day's transactions.
You cannot make cash transactions of more than Rs 2 lakh in a day. Cash transactions do not only mean withdrawing money from the account. It includes withdrawing cash, transferring from one account to another or making payments to someone. Therefore, the daily cash transaction limit of any bank is kept below Rs 2 lakh.
Briefly about rules related to cash deposits
If you deposit up to Rs 50,000 in the bank then PAN card is not required.
If you deposit more than Rs 50,000, you will have to provide your PAN card.
If Rs 2 lakh or more is deposited in your savings account in a day, then a penalty of 100 per cent can be imposed under section 269ST of the Income Tax Act.
You can deposit a maximum of Rs 10 lakh in your savings account in a year.