Banks Will Inform Income Tax Dept About 'Large' Deposits Of Rs 2000

Shreya Bose

Shreya Bose

May 27, 2023

Banks will have to mandatorily notify the income tax department of large cash deposits of ₹2,000 currency notes above a threshold. 

Banks Will Inform Income Tax Dept About 'Large' Deposits Of Rs 2000

Part of annual statement

This is part of the statement of financial transactions (SFT) they are mandated to submit to the tax authority annually.

However, the exact currency denomination of the deposits does not need to be specified.

Tax evasion scrutiny

This would bring large cash deposits made during the ongoing phasing out of ₹2,000 notes under the radar of tax officials.

It is the job of these officials to routinely sift through data to detect tax evasion.

The reporting thresholds stand at ₹10 lakh for term and savings deposits and ₹50 lakh for current account deposits.

Not a new requirement

It should be understood that this reporting system is not a new provision in the wake of RBI’s decision to recall ₹ ₹2,000 notes.

Rather, it has been in place for a long time. 


As an anonymous source explained, “Everyone may keep some funds in cash for a rainy day. 

But, can there be a genuine reason for anyone to maintain large piles of cash, especially high-denomination notes, instead of trying to earn interest? 

That behaviour should merit an explanation, especially if the deposit is disproportionate to the income reported in the tax return. So, that question will be asked.”

Too early to speculate

Another person in the know said it might be too early to speculate whether large cash deposits in the wake of the withdrawal of ₹2,000 notes reported by banks will attract scrutiny.

“Let people exercise their right to deposit or exchange the cash. It is not the right thing to spook the public,” the person said.

Voluntary admission

The tax department has been encouraging taxpayers to disclose any transaction they might not have reported while updating their tax returns.

The e-verification scheme launched in 2021 and the scheme to update tax returns introduced in 2022 enable assessees to update their returns for previous years and add back any erroneously omitted income or to come clean on under-reporting of earnings.

Legitimate funds no cause for worry

Sudhir Kapadia, partner, tax and regulatory services at EY said that those who have legitimate funds in cash need not worry about depositing to banks.

He said, “As per existing rules, unusually high cash deposits get reported to the department irrespective of the currency denomination. 

Nothing in the RBI’s announcement of withdrawal of ₹2000 note changes that position.”

Repeated exchanges may require IDs

As a measure of caution, some banks are insisting that those who make repeated attempts to exchange ₹2,000 notes furnish their IDs.

RBI governor Shatikanta Das is expected to meet senior officials of private sector banks next week where the progress of ₹2,000 note exchanges and deposits would be discussed.

Problems faced in the process would also be addressed.

Shreya Bose
Shreya Bose
  • 560 Posts

Subscribe Now!

Get latest news and views related to startups, tech and business

You Might Also Like

Dec. 8, 2022

Beat The Burden Of Medical Inflation With A Health Insurance

As disease rates rise and medical technology develops, treatment costs climb. It’s essential to understand that medical costs are not exclusively associated with hospitals. The cost of prescription drugs, diagnostic procedures, ambulance and operating room fees, consultations with doctors, and other costs are also constantly increasing. All of them could put a big strain on […]

Dec. 8, 2022

3 Biggest Changes Of iOS 16.2 Update That Every iPhone User Should Know!

In its latest update Apple said that it is preparing for the iOS 16.2 update for iPhones across the world. Notably, like the previous release, there are a couple of changes coming for the iPhones.  Contents iOS 16.2 Update Release Date So far, Apple has not announced a release date for iOS 16.2 update. Reportedly, […]

Dec. 8, 2022

300 Microsoft Employees Create Employee Union, First Time Ever: This Is How Microsoft Reacted

Around 300 workers at Microsoft Corp.’s ZeniMax Studios have commenced the process of forming a union which is said to be the first at the software giant in the US.  Here, Microsoft Corp.’s ZeniMax Studios known for popular video games including Skyrim and Fallout. Forming Union In Microsoft Corp Moreover, the quality assurance employees at […]

Dec. 7, 2022

India Beats China In Air Travel Safety: Ranking Jumps From 102 To 48 In Global Aviation Safety

India’s air safety protocols and executions have improved drastically over the years, as validated by the findings of a specialized agency of the United Nations, the International Civil Aviation Organization or ICAO. The UN watchdog has upgraded India’s ranking in terms of aviation safety to the 48th position, jumping past the rankings of countries like […]

Recent Posts

Related Videos


Subscribe Now!

Get latest news and views related to startups, tech and business

who's online