Bank Account Limits in India 2026: Rules Decoded

Banks monitor large cash deposits and withdrawals in savings accounts to prevent tax evasion. If transaction is above prescribed limits, bank report it to the Income Tax Department via the Annual Information Statement (AIS).

In a single financial year from April 1 to March 31 you can deposit or withdraw up to ₹10 lakh in cash without automatic reporting.

If limits is above ₹10 lakh, you have to explain the cash source in your ITR, otherwise it may be treated as unaccounted income and attract penalties.

To manage higher amounts, you may spread transactions across multiple bank accounts in different banks to stay under limits in a single Financial Year, but you must maintain proof of source.

Examples:

For ₹20 lakh cash withdrawal: Split as ₹9.9 lakh each from two savings accounts — no reporting or TDS. 

Higher Limits for Current Accounts

Current accounts are used mainly for businesses which allows higher cash transactions due to larger volumes.

Cash deposit or withdrawal up to ₹50 lakh per FY is allowed without reporting. 

If this limit is above ₹50 lakh, banks report to the IT Department via AIS, requiring ITR explanation of sources like business receipts. 

Credit Card Payment Restrictions

Cash payments toward credit card bills are limited to ₹1 lakh annually to curb money laundering disguised as personal expenses. 

Exceeding this limit — whether through cash or online payments triggers reporting by the bank or financial institution to AIS.

Mandatory Reporting of Bank Accounts in ITR

All domestic and foreign bank accounts must be disclosed in ITR to ensure transparency. 

Failing to report any account incurs a ₹10,000 penalty per assessment year.

For Indian residents, foreign bank accounts and NRO accounts (Non-Resident Ordinary) must be reported under Schedule FA (Foreign Assets).

Digital Transaction Limits

UPI limit is ₹1 lakh per day, increased to ₹5 lakh for hospitals or education payments. NEFT/IMPS have no strict lower limits (IMPS max ₹5 lakh), while RTGS starts at ₹2 lakh with no upper limits.

Penalties for Unexplained or Black Money Transactions

Depositing or withdrawing cash without a verifiable source is treated as unexplained money or black money or unaccounted income, that may attract 84% tax + penalty (income tax + surcharge or cess). 

TDS on Cash Withdrawals u/s 194N

Banks deduct TDS (Tax Deducted at Source) on large cash withdrawals if ITR filing history applies.

So, you must try to stay compliant with 2026 bank rules by capping savings cash at ₹10L, current at ₹50L and splitting across accounts to avoid AIS flags and 84% unexplained income penalties.