Cash and Deposit Rules of Bank In India, the rules regarding cash deposit and withdrawal are very strict. If you also frequently deposit and withdraw cash in the bank, then you should know these rules.
It has recently been decided by the Reserve Bank of India to withdraw the 2000 rupee banknote. Along with this, people have been given time till September 30 to withdraw the 2000 notes they have. According to the RBI guidelines, one can exchange a maximum of 10 notes of 2000 at a time. However, no limit has been fixed for depositing Rs 2000 notes.
In such a situation, the question is arising in the mind of the people that up to what limit tax is not levied on depositing notes in the bank and if someone deposits notes in the bank outside this limit, then how much tax he will have to pay.
Deposit and withdrawal limits of cash in the bank As per the Income Tax Act, certain transactions are deemed to be specified financial transactions. If a person deposits Rs 10 lakh in cash in his savings account in a financial year, the bank will have to report such transactions. On the other hand, if a person deposits Rs 50 lakh in a current account in a financial year, the bank will have to report such transactions.
Let us tell you, no tax is charged by the government on depositing cash. However, it must have a source. As per section 194N of the Income Tax Act, 1961, TDS is deducted on cash withdrawals beyond a certain limit.
If you have been submitting ITR continuously for the last three years, then TDS of 2 percent will be deducted on withdrawal of more than Rs 1 crore in a financial year. At the same time, in other cases, a TDS of 2 percent will be deducted for withdrawing more than Rs 20 lakh in a financial year and TDS of 5 percent for withdrawing more than one crore.
What will happen if the source of cash deposited in the bank is not disclosed? Many times it is seen that people forget to file income tax return or show the benefit due to any exemption in their income tax. For this reason, the Income Tax Authority can issue a notice to you for depositing cash in the bank. This notice is issued under Section 68 of the Income Tax Act, 1961 and even after the issue of the notice, if you are unable to disclose the source, then 60 percent tax, 25 percent surcharge and 4 percent cess will be levied on that amount.
What are the cash deposit and withdrawal rules regarding cash loans?
As per Section 269SS and 269T of Income Tax, no businessman can accept or repay a cash loan of more than 20000 in a financial year. If he violates this limit, he will be fined as per section 271D and 271E.
For example, a trader whose business is covered under section 44AD of Income Tax. He has deposited Rs 29 lakh in his account and out of this he has shown Rs 23 lakh as business income. Rs 8 lakh has been withdrawn as cash on behalf of the merchant and it has been shown that Rs 3 lakh was received in transaction from some person.
As cash was deposited Rs 29 lakhs and Rs 23 lakhs was received. For this reason, Income Tax can ask for the answer for the remaining 6 lakh rupees.
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