Have you ever considered the rules for depositing money into your savings account during a business year? Under tax laws, if your total deposits across all savings accounts exceed Rs 10 lakh between April 1 and March 31, you may receive a notice from the tax department. This Rs 10 lakh limit applies to the combined deposits in all your savings accounts, not just one. Exceeding this amount requires you to inform the Income Tax Department.
Tax Reporting and Exemptions on High-Value Deposits
Such high-value transactions must be reported by banks to the Income Tax Department. Furthermore, if you make a deposit exceeding Rs 50,000 in a single day, you are required to provide your PAN details. If you don’t possess a PAN, you will need to submit Form 60 or 61 as an alternative.
Interest earned on these deposits is subject to tax based on the applicable tax slab if it exceeds Rs 10,000 in a year. However, if the interest is below Rs 10,000, you can claim a tax exemption under Section 80TTA of the Income Tax Act. For senior citizens, this exemption limit is higher, up to Rs 50,000 under Section 80TTB.
Handling Tax Notices and Cash Transaction Limits
If you receive a notice from the Income Tax Department regarding high-value deposits, you will be required to provide appropriate documentation to clarify the source of the funds. This may include bank statements, investment records, or inheritance documents. It’s recommended to seek guidance from a certified tax advisor. Furthermore, under Section 269ST, cash transactions exceeding Rs 2 lakh with any person in a single day are prohibited.
