Do you know that there are certain rules for cash deposits and withdrawals in a savings account? If you do not follow them, you may be fined or questioned. Therefore, it is important that you know about these rules so that you do not make any mistakes.
Rules for depositing and withdrawing cash in savings account
Everyone has a savings account in some bank or the other. All of us women use savings accounts. Your savings account will also be linked to UPI transactions. Many times you must be depositing cash in this account or withdrawing a large amount at once. But do you know that there are some rules for this too, which come under the rules of the Income Tax Department. It is important to follow them so that you do not have to face any problem.
Deposit and Withdrawal Rules
As per the Income Tax rules, there is a limit on depositing cash in a savings account. There is a limit on how much cash you can deposit in a bank account in a given period. This limit is made to keep an eye on cash transactions so as to prevent money laundering, tax evasion and other illegal financial activities.
If you deposit Rs 10 lakh or more in a financial year, you have to report it to the Income Tax Department. However, if you have a current account, the limit is Rs 50 lakh. Transactions above these limits have to be reported by financial institutions to the Income Tax Department.
Rules under section 194A
If you withdraw more than Rs 1 crore from your savings account in a financial year, 2% TDS (Tax Deducted at Source) will be deducted on it. For those who have not filed ITR (Income Tax Return) for the last three years, 2% TDS will also be deducted on withdrawals above Rs 20 lakh.
If such people withdraw Rs 1 crore in a financial year, they will be charged 5% TDS. TDS deducted under section 194N is not classified as income, but you can use it as a credit while filing ITR.
Rules under section 269ST
Under Section 269ST of the Income Tax Act, if a person deposits cash of Rs 2 lakh or more in a financial year, he will be fined. However, this penalty does not apply to withdrawals from the bank. But, TDS is deducted on withdrawals above a certain limit.