Do you possess a huge savings account balance? If so, beware! The Income Tax Department can be monitoring your transactions. You might not be aware that you need to avoid large amounts in savings accounts or transactional amounts to attract an IT notice.
How Much is Safe in a Savings Account?
A savings account is for small deposits and regular usage. But if you put or hold a sizeable amount, the IT Department might take notice.
Major Savings Account Rules:
- Amount above ₹10 lakhs could lead to the IT Department’s attention.
- Exceeding ₹50,000 in cash deposits requires PAN card details.
- More than ₹2 lakhs cash deposit without PAN can invite a notice.
- Over ₹50 lakhs of transactions per year necessitate compulsory filing of ITR.
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When Does the Income Tax Department Issue Notices?
If your bank account has unexpectedly large deposits or displays unusual transaction behavior, the IT Department might send a notice.
Circumstances That Can Lead to a Notice:
- Cash deposits of more than ₹10 lakhs in one year.
- A single cash deposit of over ₹2 lakhs (without PAN).
- Cash withdrawals of more than ₹1 lakh in a single transaction.
- Difference between income and transactions.
- Failure to file ITR or complete KYC.
What is the Safe Cash Deposit Limit?
Income Tax Department has imposed some limits on bank transactions. Crossing them may invite notices.
Cash Deposit Rules:
- PAN is required for cash deposits of more than ₹50,000.
- PAN compulsory for deposits above ₹2 lakhs (or face a notice).
- Large cash deposits in a year > ₹10 lakhs can prompt IT attention.
- All transactions in excess of ₹1 crore (cash + internet) must be filed with an ITR.
What to do if you Receive an Income Tax Notice?
When you receive an IT notice, don’t lose your cool. Here’s what to do:
- Read the notice with care – know why.
- Verify bank statements – Confirm transactions mentioned.
- Have documents in hand – Establish your source of income.
- File ITR (if outstanding) – Immediately.
- ake the help of a CA if necessary – For complicated cases.
How to Utilize a Savings Account Wisely?
- Do not keep extra money idle – Invest in FDs, mutual funds, etc.
- PAN & ITR compliance before big transactions.
- Prevent suspicious transactions – Reduce cash transactions.
- File ITR annually – Remain tax-compliant.