We all know what it's like to sell an old car, get a big present at a wedding, or finally empty that huge piggy bank you've been filling for years.
You go to the bank with a lot of cash to put into your savings account, but then you wonder, "Is there a limit to how much I can deposit?" Will the IRS see this?
It's a real worry. In a time when "Digital India" is the buzzword and the government is going after people who don't report their money, it's important to grasp the rules on cash deposits.
All you need to know about restrictions on cash deposits in savings accounts, the tax consequences, and how to stay on the right side of the law.
Is There a Cash Deposit Limit?
Technically, banks don't usually stop you from depositing your own hard-earned money. However, there is a massive difference between what the bank allows and what the Income Tax (IT) Department tracks.
While you can deposit large sums, anything beyond a certain threshold triggers an automatic notification to the tax authorities. Think of it like a silent alarm that goes off when the numbers get high.
The Most Important Thresholds You Should Know
- ₹50,000: For PAN cards, this is the magic number. You need to give your PAN information if you deposit more than ₹50,000 in one day.
- ₹10 Lakhs: If you put more than ₹10 lakhs in cash into one or more savings accounts in a single financial year, the bank is obligated by law to send a Statement of Financial Transactions (SFT) to the Income Tax Department.
Bank-Specific Cash Deposit Charges
While the government tracks your money for tax purposes, banks track it for "service" purposes. Most savings accounts come with a "free" limit.
Once you cross that, the bank starts charging you for the manual labor of counting and handling that cash.
Below is a general look at how major banks structure these limits.
Cash Deposit Limits & Charges (Indicative)
| Bank Name | Free Cash Deposit Limit (Monthly/Per Transaction) | Charges Beyond Free Limit |
| SBI (State Bank of India) | 3 Transactions per month | ₹50 + GST per transaction |
| HDFC Bank | ₹2 Lakhs per month or 4 transactions | ₹5 per ₹1,000 (min. ₹150) |
| ICICI Bank | ₹1 Lakh per month or 4 transactions | ₹5 per ₹1,000 (min. ₹150) |
| Axis Bank | ₹2 Lakhs or 4 transactions | ₹5 per ₹1,000 (min. ₹150) |
| Kotak Mahindra | 4 Transactions or ₹2 Lakhs | ₹4.5 per ₹1,000 (min. ₹150) |
Note: These charges vary based on the type of savings account (e.g., salary account vs. basic savings account). Always check your specific branch's latest schedule of charges.
Why Does the Income Tax Department Care
You might wonder, "It’s my money; why does the government need to know?" The primary reason is to curb Black Money.
By monitoring large cash transactions, the government can identify individuals whose lifestyle or bank balance doesn't match their declared income.
Discover smart ways to invest idle money in your savings account.
What is SFT (Statement of Financial Transactions)?
Banks are mandated to submit an SFT to the tax department if an individual’s transactions cross certain limits. For savings accounts, as mentioned, the limit is ₹10 lakhs in a financial year.
If you deposit ₹12 lakhs in cash but your ITR (Income Tax Return) says you only earned ₹5 lakhs this year, expect a "Please Explain" notice from the IT department.
Is Cash Deposit the Same as Taxable Income
This is a common misconception. Depositing cash is not a tax in itself. If you can prove the source of the money, you have nothing to worry about. For example:
- Gifts: Money received from close relatives (like parents or siblings) is generally tax-free.
- Past Savings: Money you withdrew two years ago and are now re-depositing.
- Agricultural Income: Usually exempt from tax but needs to be documented.
However, if you can't explain the source of the money, it is considered an "unexplained investment," and taxes can be as high as 60% plus surcharges.
Cash Deposit Limits vs. Current Accounts
If you are running a business, you likely have a current account. The rules there are a bit more relaxed because businesses handle more cash.
Check Canara Bank savings account interest rates.
Savings Account vs. Current Account Cash Deposit Limits
| Feature | Savings Account | Current Account |
| Annual Cash Deposit Limit (Reporting) | ₹10 Lakhs | ₹50 Lakhs |
| Purpose | Personal savings/Investment | Business transactions |
| Interest Earned | 2.70% to 7% (approx.) | Usually 0% |
| PAN Requirement | Above ₹50,000 | Above ₹50,000 |
How to Avoid Getting an Income Tax Notice
Getting a notice isn't the end of the world, but it is a headache. Here is how you can stay clear:
- Stay Under the ₹10 Lakh Limit: If possible, use digital modes like UPI, NEFT, or IMPS. There is no "cash handling" limit on digital transfers (though you still need to justify the income).
- Declare Your Income Properly: Ensure your ITR reflects your actual earnings.
- Keep Records: If you sell a piece of jewelry or a vehicle, keep the sale receipt. If you get a cash gift for a wedding, keep the invitation card or a diary of gifts.
- Don't "Split" Deposits: Some people think depositing ₹90,000 ten times is better than depositing ₹9 lakhs once. This is called "structuring," and banks have algorithms to detect this easily. It actually looks more suspicious!
New to banking? Read this easy savings account guide now.
Important Rules for Senior Citizens
Senior citizens often keep cash at home for emergencies. The rules for deposits remain the same (₹10 lakh reporting limit), but senior citizens often enjoy higher thresholds for TDS on interest income.
While the cash deposit limit doesn't change, the scrutiny might be slightly more lenient if the source is clearly "pension savings," but it's always better to maintain documentation.
Key Terms You Should Know
- SFT: Statement of Financial Transactions. A report banks send to the government.
- TDS: Tax Deducted at Source.
- Financial Year: April 1st to March 31st of the following year.
- Section 194N: The law governing TDS on high-value cash withdrawals.
- CBDT: Central Board of Direct Taxes, the folks who make these rules.
Summary: Cash Transaction Limits at a Glance
| Transaction Type | Limit | Consequence/Action |
| Single Day Cash Deposit | ₹50,000 | PAN Card Required |
| Annual Cash Deposit (Savings) | ₹10 Lakhs | Reported to Income Tax Dept |
| Annual Cash Deposit (Current) | ₹50 Lakhs | Reported to Income Tax Dept |
| Cash Withdrawal (Annual) | ₹1 Crore | TDS applicable (Section 194N) |
| Cash Gift (Non-relatives) | ₹50,000 | Taxable as "Income from Other Sources" |
Final Thoughts: The "Safe" Way to Handle Cash
The world is moving toward a cashless economy, and the Indian government is leading the charge. While cash is still king for many of us, it’s important to play by the rules to avoid unnecessary legal tangles.
If you find yourself with a large amount of cash:
- Ask yourself if the source is documented.
- Check if you’ve already deposited a significant amount this year.
- Consider using digital channels for future transactions.
Remember, the Income Tax department isn't looking to punish you for saving money; they just want to ensure that every rupee in the system is accounted for.
Keep your PAN updated, file your taxes on time, and keep your receipts. It’s the simplest way to enjoy peace of mind while your savings grow.
Frequently Asked Questions (FAQs)
Can I deposit ₹2 lakhs in cash in my savings account?
Yes, you can. You will need to provide your PAN card. As long as your total deposits for the year are under ₹10 lakhs, it won't be automatically reported to the IT department via SFT.
What happens if I don’t have a PAN card?
If you don't have a PAN, you must fill out Form 60. However, for large transactions, banks strongly prefer a PAN. Consistent large deposits without a PAN are a major red flag.
Is there a limit on withdrawing cash?
While we've focused on deposits, withdrawals also have rules. Under Section 194N, if you withdraw more than ₹1 crore in a year (or ₹20 lakhs if you haven't filed ITR for 3 years), TDS (Tax Deducted at Source) will be applied.
Does the limit apply to the total of all my accounts?
Yes. If you have three different savings accounts in three different banks, the ₹10 lakh limit is cumulative (total across all accounts) because your PAN links them all together.
