Income Tax Notice: North Dumdum, July 29, 2025: It is currently very important for every Indian citizen to be aware of the income tax rules. A small mistake can cause big trouble for you, and you might even receive a notice from the Income Tax Department for it. Especially for those who transact through a savings account, it is mandatory to follow some specific rules. If these rules are not followed, the Income Tax Department can take action against you. In this post, we will discuss some important rules for transactions through a savings account that will help you save yourself from an income tax notice.
Large Cash Deposits
According to the rules of the Income Tax Department, if a person deposits cash of ₹10 lakh or more in their savings account in a financial year, the bank is obliged to report that information to the Income Tax Department. This rule applies to all your savings accounts combined. That is, if you have savings accounts in multiple banks and the total deposit amount exceeds ₹10 lakh, you may still come under the scrutiny of the Income Tax Department. In the case of such large transactions, you may have to provide complete information about the source of that money. If this deposit is not consistent with your income, the department may start an investigation against you.
Daily Cash Deposit Limit
As per income tax rules, it is mandatory to provide PAN card details for depositing more than ₹50,000 cash in a single day. If you do not have a PAN card, you will have to fill and submit Form 60. This rule has been primarily created to monitor large cash transactions to prevent black money transactions.
TDS on Cash Withdrawal
According to the Income Tax Act, there are also some rules regarding cash withdrawals. If a person withdraws more than a total of ₹20 lakh in cash from all accounts in a financial year and has not filed an Income Tax Return (ITR) for the last three years, the bank will deduct TDS at a rate of 2%. On the other hand, if the person has filed an ITR, 2% TDS will be deducted on cash withdrawals of more than ₹1 crore. If a person has not filed an ITR and withdraws more than ₹1 crore, the TDS rate increases to 5%.
Other Important Points
- Departmental Inquiry: If the Income Tax Department finds any discrepancy in your account transactions, they can ask you for an explanation. You will have to provide correct information about the source of your income and the reason for the transaction.
- Providing Correct Information: Always provide correct information when opening a bank account or during large transactions. Ensure that your address, PAN number, and other information are accurate.
- KYC Update: It is important to update your KYC (Know Your Customer) information over time. This increases the security of your account and protects you from various types of fraud.
In conclusion, it is extremely important to follow the income tax rules when transacting through a savings account. By following the rules mentioned above, you can avoid notices from the Income Tax Department and live a transparent financial life.
