This article is about the key limits and compliance rules for current account transactions and states why business must use this account to avoid notice.
Why Current Account is Required for Business?
All bank accounts are linked to PAN and Aadhaar so, if you are doing any business-related transactions such as Cash deposits, Cash withdrawals, UPI / online payments ,Customer receipts, Vendor payments then you must do through a current account not from savings account.
Banks always monitors unusual activity in savings accounts. Mixing business money with personal may looks suspicious. Bank can freeze the account or trigger notices from Income Tax or GST departments.
This separation from personal savings accounts keeps business activities transparent and compliant, as Government departments such as Income Tax, GST, ED, etc. track high-value transactions or repeated cash movement across accounts linked to the same PAN or Aadhaar.
How Many Current Accounts Can One Person Have?
There is no legal limit on the number of current accounts you can open.
Current accounts Cash Limits
Banks report to Income Tax via Statement of Financial Transactions if cash deposits exceeds the below mentioned amounts in a single current account per PAN per Financial year.
| Transaction Type | Limit per FY per Account | Consequence if Exceeded |
| Cash Deposit | Rs 50 lakh | SFT report to IT Dept |
| Cash Withdrawal | Rs 50 lakh | SFT + TDS under 194N applies on excess withdrawals. |
Note:
If ITR filed for the last 3 years: No TDS upto Rs 1 crore but 2% TDS applies on withdrawal of above Rs 1 crore.
No ITR for last 3 years: 2% TDS above Rs 20 lakh; 5% above Rs 1 crore.
Notice Triggers and Timeline
Exceeding limits prompts SFT reports, but notices depend on ITR mismatch such as ITR-1 with more than Rs 50 lakh deposits but no business income.
- Section 143(2): Scrutiny assessment by June 30 of Assessment Year (e.g., FY24-25 ITR → June 30, 2026).
- Section 133(6): Anytime, no deadline.
- Section 148: 4 years generally, extends to 6 years if more than Rs 50 lakh unreported income.
Consequences of Non-Compliance
If you fail to justify transactions then entire amount will be treated as income and may levy heavy interest, tax, penalties up to 83–84%. Banks may also freeze accounts first for suspicious activity.
Remedies to Stay Safe
To avoid notices you must maintain records for cash deposit and withdrawal. File proper ITR annually, justifying all via sales or services. Use current account exclusively for business. Check AIS/TIS/Form 26AS regularly and update email or mobile on portals. File correct ITR form and respond timely to notices.
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