Cash Deposit Rules: There is big news for bank account holders. It is common for individuals to maintain a savings account with a bank, as having an account is essential for conducting online transactions. Additionally, funds deposited in a bank are generally regarded as more secure. Whether for personal use, small businesses, or professionals, it is typical for individuals to hold one or more savings accounts. However, it is important to note that there is a limit to the amount of cash that can be held in a savings account.
Exceeding the limit set by the Reserve Bank of India (RBI) may result in significant penalties. Furthermore, holding an amount above this threshold could attract scrutiny from the Income Tax Department.
What is the maximum amount allowed in a savings account?
Account holders are permitted to maintain up to Rs 10 lakh in their savings accounts. Should this amount surpass Rs 10 lakh, it is necessary to notify either the Reserve Bank of India or the Income Tax Department. This notification must be submitted under the Annual Information Return (AIR). It is important to clarify that this does not automatically imply a tax obligation; however, if the amount exceeds your income, you will need to provide justification. For current savings accounts, the limit is set at Rs 50 lakh.
Requirement of PAN number for transactions
For any transaction amounting to Rs 50,000 or more, a Permanent Account Number (PAN) is required. Additionally, if the total transaction amount exceeds the specified limit within a year, a PAN number will also be necessary. This requirement ensures that the transactions can be monitored, although it does not entail a tax payment. Nevertheless, you must inform the tax authorities about the transaction amount.
You will need to provide documentation regarding the source of the funds or where the money has been credited. Therefore, it is advisable to keep your savings account balance within the stipulated limit. Alternatively, you can consider investing this money in various schemes or fixed deposits to build a substantial fund. Some banks also offer the option to convert your savings account into a fixed deposit account, and further details can be obtained from your bank’s website.