Overview
The Income Tax Act, 2025, read with the Draft Income Tax Rules, 2026, ushers in a significant reset of the rules that govern savings bank account transactions in India. Effective April 1, 2026, the compliance framework has been simultaneously simplified for ordinary depositors and tightened for high-value cash handlers.
Key Change
The old rule asked you to quote PAN every time a single cash deposit crossed Rs 50,000 - even if you made ten such deposits a year perfectly legitimately. The new Draft Rules 2026 shift this to an annual aggregate of Rs 10 lakh across all your bank accounts, making day-to-day banking less intrusive while keeping a firm lid on large cash flows.
The Big Six Limits at a Glance
- Savings account Statement of Financial Transaction (SFT) threshold: Aggregate cash deposits that trigger bank-to-IT reporting per financial year is Rs 10 Lakh
- Current account SFT threshold: Businesses crossing this limit will have transactions auto-reported via SFT is Rs 50 Lakhs
- PAN mandatory: Annual aggregate deposits or withdrawals crossing Rs 10 Lakh/yr now require PAN - replacing the old Rs 50K/day rule.
- TDS for non-ITR filers: Sec 194N- 2% TDS on transactions above Rs 20L; for non-filers of Income Tax.
- Section 269ST penalty trigger: Receiving Rs 2 lakh or more in cash in a single transaction or related series attracts a 100% penalty.
PAN Quoting - Old vs New (Draft Rules 2026)
One of the headline changes in the Draft Income Tax Rules, 2026 is a complete overhaul of the thresholds at which PAN must be quoted. This removes the friction of daily monitoring and replaces it with an annual aggregate view:
| Transaction Type | Old threshold | New Threshold |
| Cash deposit or withdrawal - any bank account | Rs 50,000 per day | Rs 10 lakh per year |
| Immovable property purchase/sale | Rs 10 lakh | Rs 20 lakh |
| Vehicle purchase (incl. two-wheelers) | Any motor vehicle (two-wheelers exempt) | Rs 5 lakhs this includes 2 wheeler |
| Hotel / travel / event payments | Rs 50,000 | Rs 1lakh |
The aggregate-based PAN rule means banks will now track your total deposits across an entire financial year - not just flag you on a single large day.
How the SFT Reporting Works - And What Appears in Your AIS?
When aggregate cash deposits in your savings account cross Rs 10 lakh in a financial year, your bank is legally required to file a Statement of Financial Transactions (SFT) with the Income Tax Department. This is not a notice - it is an automatic, system-generated data-share. The data then populates your Annual Information Statement (AIS) and Tax Information Statement (TIS), visible when you log in to the income tax e-filing portal.
What this means practically: if you have deposits of Rs 11 lakh from salary, business receipts, or agricultural income, and you file an ITR that shows consistent income - you are unlikely to face any issue. The scrutiny arises when there is a mismatch between what appears in AIS and what you have declared.
TDS on Cash Withdrawals - Section 194N Decoded
Tax Deducted at Source (TDS) on cash withdrawals is not new, but the thresholds remain a common source of confusion. Here is the complete matrix for FY 2026-27:
- For regular ITR filers: 2% TDS is deducted by the bank on cash withdrawals exceeding Rs 1 crore in a financial year. No TDS below this level.
- For non-filers (no ITR for prior 3 years): lower band: 2% TDS on the amount of cash withdrawals exceeding Rs 20 lakh.
- For non-filers - upper band: 5% TDS on the portion of cash withdrawals exceeding Rs 1 crore in the same financial year.
Cash Transaction Rules Beyond Deposits - Sections 269SS, 269T & 269ST
These provisions catch high-value cash flows that happen outside of bank deposits:
| Provision | Rule | Penalty |
| Section 269SS | No loan or deposit of Rs 20,000+ may be accepted in cash | Penalty equal to loan amount |
| Section 269T | No repayment of loan/deposit of Rs 20,000+ in cash | Penalty equal to repayment amount |
| Section 269ST | No receipt of Rs 2 lakh or more in cash from a single person in one day / one transaction / same event | 100% of amount received |
FAQs
Can I keep more than Rs 10 lakh in my savings account?
Yes, absolutely. There is no upper cap on the balance you can maintain. The Rs 10 lakh figure is a cash deposit reporting threshold - not a balance limit. The interest you earn on your balance must be declared in your ITR.
Do I need to worry if my total deposits include non-cash credits like salary, NEFT, or UPI?
The SFT reporting threshold and the PAN quoting requirement apply specifically to cash deposits. Electronic credits (salary, NEFT, IMPS, UPI) do not count toward the Rs 10 lakh cash deposit trigger.
What if I don't have a PAN? Can I still deposit large amounts of cash?
If you do not possess a PAN, you can submit Form 60 (or Form 61 for agricultural income) as an alternative. However, note that the Income Tax Department is increasingly cross-linking Aadhaar-PAN data, so obtaining a PAN is strongly advisable.
How far back can the IT Department send a notice for suspicious cash deposits?
For transactions up to Rs 50 lakh, notices can be issued up to 3 years from the end of the Assessment Year (plus 3 months). For transactions exceeding Rs 50 lakh, the window extends to 5 years from the end of the Assessment Year. Given that AIS/TIS now shows data in near-real time, mismatches are flagged much faster than before.
I received a large cash gift from my parents. Will this trigger scrutiny?
Gifts received from specified relatives (including parents) are exempt under Section 56(2) of the Income Tax Act. However, you must be able to prove the relationship and maintain proper documentation - ideally a gift deed and the donor's source-of-funds evidence.
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