Swipe Smart, Save Smarter: The ₹2 Lakh Rule You Can’t Ignore

With online transactions flourishing and financial discipline on the upswing, finding out the daily transaction limits of your savings account has never been so crucial. The Reserve Bank of India and the Income Tax Department have explicitly outlined the limits to prevent any ill-gotten cash flows and provide transparency.

Fundamental Principles for Daily Transactions

Cash payments over Rs 2 lakh a day are prohibited under Section 269ST of the Income Tax Act

This restriction includes deposits, withdrawals, and payments in cash, either in one payment or collectively from one individual

Violating this rule may draw penalties and instigate tax scrutiny

Annual and Identification Thresholds

The total cash deposits under a savings account cannot exceed Rs 10 lakh in a financial year

Deposits over Rs 50,000 in a day require PAN card to be furnished

If the source of consideration cannot be ascertained, tax department can impose a 60% tax with surcharge and cess

Bank-Specific Rules May Apply

Though RBI can set a regulatory cap, the banks can set their own daily or monthly caps

For example, ICICI Bank provides free deposit of up to Rs 1 lakh per month in base branches, with a charge levied above that

Why It Matters

Remaining within these boundaries prevents tax notices, penalties, and compliance issues

It also offers more effective banking services and better financial planning

Sources: Axis Bank, CAclubIndia, ICICI Bank, IndiaTV News