A bank account is essential for securing your money, earning interest, and performing financial transactions like availing government schemes, investing in fixed deposits (FD), or making UPI payments. In India, a person can have multiple bank accounts, as there is no restriction on the number of accounts one can hold. But, do you know how much money can be kept in a bank account or how much cash can be deposited? Let’s explore these details:
1. How Much Money Can You Keep in a Bank Account?
- No Limit on Holding Money: You can keep as much money as you want in your savings account, and there is no upper limit. Whether it’s in thousands, lakhs, or crores, there is no restriction.
- Need to Declare Source of Income: However, if the deposited amount is substantial and falls under taxable income, you will need to declare the source of the income. Though there is no cash deposit limit via cheques or online transfers, ensuring that large deposits are legally accounted for is crucial.
2. Cash Deposit Limits
- Depositing Rs 50,000 or More: If you deposit Rs 50,000 or more in cash, you are required to provide your PAN card details. This is a mandatory rule to help the bank monitor large cash transactions.
- Daily Cash Deposit Limit: You can deposit up to Rs 1 lakh in cash per day. If you don’t regularly deposit cash, this limit can extend to Rs 2.50 lakhs for one-time deposits.
- Annual Cash Deposit Limit: Over the course of a financial year, you can deposit a maximum of Rs 10 lakh in cash into your account. Exceeding this limit will trigger scrutiny by the Income Tax department.
3. Depositing More Than Rs 10 Lakh Cash? IT Department Notices
- Income Tax Department Notification: If you deposit more than Rs 10 lakh in cash in a financial year, the bank will automatically notify the Income Tax (IT) department.
- Must Provide Source of Funds: In such cases, you will need to explain the source of the funds. If you fail to provide a valid reason for the large deposits, the IT department may initiate an investigation, leading to penalties or fines.
4. Penalties Imposed by the Income Tax Department
- Penalty Rates: If you deposit more than Rs 10 lakh in cash and fail to explain the source of the funds, the IT department can impose penalties of 60% tax, 25% surcharge, and 4% cess on the amount.
- Ensuring Legal Deposits: It’s crucial to ensure that the funds you deposit have a legal and clear source. If you can provide proof of income, you can deposit any amount without worry. To make the best use of your money, consider investing in fixed deposits or other financial instruments to earn better returns while ensuring transparency.
There is no upper limit on the amount you can hold in your bank account, but it’s important to follow income tax rules and provide your PAN card details for cash deposits above Rs 50,000. Regularly depositing large amounts of cash requires careful attention to the source of the funds.
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