cash recieved more than 2 lacs

This query is : Resolved

PAWAN PAMNANI (Querist)
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12 September 2017 dear experts kindly guide me that if some one deposited 15 lacs cash in a single day in bajaj life insurance for new policy that what will happen for corporation and he has deposited in a block of 200000 and adjusted in one policy of 5lacs and whole amt 15lacs in 3 policies what will be done by corporation for avoid penalty

PAWAN PAMNANI

PAWAN PAMNANI (Querist)
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13 September 2017 y problem not resolved yet

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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18 July 2024 When an individual deposits cash of more than Rs. 2 lakh in a single day into a life insurance policy (or any financial institution), it triggers certain reporting requirements under the Income Tax Act, 1961. Here’s what typically happens and what should be done to comply with regulations and avoid penalties:

### Reporting Requirements:

1. **Form 15G/15H:** If the depositor is eligible and wishes to avoid Tax Deducted at Source (TDS) on interest income, they may submit Form 15G (for individuals below the age of 60) or Form 15H (for senior citizens). However, these forms are not applicable for life insurance policies.

2. **PAN (Permanent Account Number):** The depositor must provide their PAN to the life insurance company at the time of depositing cash. This is crucial for compliance and reporting purposes.

3. **Cash Transaction Report (CTR):** The life insurance company is required to file a Cash Transaction Report (CTR) with the Income Tax Department for cash deposits aggregating to Rs. 10 lakh or more in a financial year. Each deposit exceeding Rs. 2 lakh in a single day falls under this reporting requirement.

### Compliance Steps:

Given the scenario you described:

- **Deposit of Rs. 15 lakh:** The depositor should have provided their PAN to the life insurance company at the time of deposit.

- **Reporting by the Life Insurance Company:** Bajaj Allianz Life Insurance, like all financial institutions, is mandated to report the cash deposit exceeding Rs. 10 lakh in a financial year through CTRs to the Income Tax Department.

- **Adjustment in Policies:** If the deposit of Rs. 15 lakh was adjusted against three policies (Rs. 5 lakh each), it's essential that all policies reflect the cash transaction appropriately in their records.

### Avoiding Penalties:

To avoid penalties and ensure compliance:

- **Provide PAN:** Ensure that PAN details are correctly provided and verified by the life insurance company.

- **Reporting Accuracy:** Verify that the life insurance company accurately reports the cash deposit through CTRs to the Income Tax Department.

- **Documentation:** Maintain proper documentation of the transaction, including receipts and records of the policies issued against the cash deposit.

### Conclusion:

It’s important to comply with these reporting requirements to avoid penalties and ensure smooth processing of the transactions. Providing PAN and ensuring accurate reporting by the life insurance company are key steps in meeting regulatory obligations under the Income Tax Act. If there are any doubts or specific queries, consulting with a tax advisor or a chartered accountant can provide tailored guidance based on individual circumstances.

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