Cash Deposit Limit in Savings Account for FY 2025: What You Need to Know Under Income Tax Act

If you’re planning large cash deposits in your savings account, it’s crucial to know the latest rules under the Income Tax Act for 2025. Exceeding the prescribed limits can trigger scrutiny, penalties, or even tax notices from authorities.

 

Key Highlights:

 

Annual Limit: You can deposit up to ₹10 lakh in cash in your savings account per financial year without attracting automatic scrutiny from the Income Tax Department. Banks are mandated to report deposits exceeding this threshold under the Annual Information Return (AIR).

 

Daily Limit: Most banks restrict individual cash deposits to ₹2 lakh per day, and any single deposit above ₹50,000 requires PAN submission.

 

Reporting & Penalties: If your total cash deposits cross ₹10 lakh in a year, expect a possible notice from the tax authorities asking for the source of funds. Unexplained deposits may be taxed at 60% plus surcharge and cess under Section 115BBE, and penalties can equal the deposited amount under Section 271DA.

 

Withdrawal Rules: Cash withdrawals above ₹1 crore in a financial year attract 2% TDS under Section 194N.

 

Outlook:

Stay within the ₹10 lakh annual limit for cash deposits in savings accounts, provide your PAN for large transactions, and maintain clear documentation of all high-value deposits to avoid tax complications and ensure compliance with the Income Tax Act, 2025

 

Source: K M Gotecha & CO LLP