It is common to place money in the bank, take out. Each day, many individuals visit the bank for this task. Every bank has its specific regulations in this area. Nonetheless, certain rules apply to all banks, and neglecting them, whether intentionally or unintentionally, can lead to significant costs. Today we’re going to discuss a specific rule that, if overlooked, could lead to a significant tax burden.
Data Needed
If you place more than a specific sum in the bank, you must supply details regarding its origin. If not, you could be required to pay income tax as high as 60 percent. It also comprises a 25% additional charge and 4% cess. The Income Tax Department is authorized to levy a 60% tax by sending notices to individuals who do not reveal their income sources.
Understand the regulations
As per the Income Tax Act, if a holder of a savings account deposits over Rs 10 lakh in cash during a financial year, he must reveal the origin of this sum. In other words, he needs to explain the origin of this money. Simultaneously, for a current account, the limit stands at 50 lakhs. Should you deposit an amount exceeding this threshold and cannot indicate its origin, you will be liable to pay income tax of up to 60 percent.
What is its purpose?
Let us now also understand what is the purpose of this whole exercise. Actually, the government is insisting on the use of cash at least. By putting limits on cash deposits, the government wants to prevent money laundering, tax evasion and illegal economic financial activities. The Income Tax Department looks at such large amounts of money from the perspective of money laundering or tax evasion, the source of which is not known. So if you are depositing more money than the prescribed limit in the bank, then be careful about this rule.
There is such a system
If you deposit Rs 50,000 or more in cash in the bank, then you have to give your PAN number. In total, you can deposit a maximum of Rs 10 lakh cash in your account in a financial year, irrespective of the number of accounts you have. If you deposit more cash than this, the bank has to inform the Income Tax Department about it. After this, you have to tell the source of this income. If you do not give satisfactory details, you can be investigated by the Income Tax Department and you can be charged tax.
