To take advantage of government programs and facilitate digital transactions, everyone needs a savings account. In India, it is possible to open as many bank accounts as you want, so many people keep multiple accounts. Investment accounts keep cash safe and procure revenue occasionally. Although most accounts, with the exception of zero-balance accounts, require a minimum balance, there is no official limit on the maximum amount that can be held in a savings account.
Cash Deposit Policy
There is no maximum amount that you can put into your savings account. However, you are required to disclose the source of your income if the amount deposited is substantial and falls within the income tax bracket. Cash deposits are subject to a specific set of rules:
For deposits of at least 50,000, the individual must provide a PAN number. Maximum daily cash deposits are 1 lakh. If not done frequently, occasional large deposits of up to 2.5 lakh rupees are permitted. All accounts have a maximum annual cash deposit limit of Rs. 10 lakh per fiscal year.
Oversight of the Income Tax Department
Every year, cash deposits exceeding 10 lakh rupees are closely monitored by the Income Tax Department. These deposits must be reported by banks, which encourages individuals to include the source of their income in their tax returns. An investigation can be started if not enough information is provided, and if non-compliance is found, severe penalties are imposed. There is a 60% tax, a 25% surcharge, and a 4% cess on the deposit amount for not disclosing the source of the income.
The purpose of these regulations is to control cash flow, ensure tax compliance, and check the circulation of unaccounted money.
Cash deposit limit in a Current Account
The cash deposit limit in a current account is typically higher than in a savings account because current accounts are primarily used by businesses and organizations for day-to-day transactions. Due to their operational nature, businesses deal with greater amounts of cash.
However, based on the bank and the business’s financial activities, specific limits may differ. For instance, the SBI current account cash deposit limit is 5 lakh to INR 100 crore per month. In HDFC it is 60 lakh or multiple times the worth of the ongoing month to month balance (AMB), subsequent to crossing this breaking point the bank might charge some revenue from the contributor.
Cash Transaction Limit
In addition to cash deposits, other financial activities are controlled by cash transaction limits. The purpose of these limits is to keep track of and watch over transactions that involve a lot of cash. Payments, transfers, and cash withdrawals are all examples of these transactions. Section 269ST restricts cash transactions to no more than INR 2 Lakh per day. Below this amount, all banks have cash transactions.
Cash Withdrawal Limit
There are limits on cash withdrawals to make sure that big cash withdrawals are reported to the right people. These restrictions are generally put in place to stop illegal activities like tax evasion and money laundering, though they may differ between banks and account types.
If a person has three different bank accounts with three different banks, they could potentially withdraw INR 1 crore from each bank at once, resulting in a total withdrawal of INR 3 crore without paying any TDS.
Limit on Fixed Deposits
Cash deposits are also subject to specific rules for fixed deposits, a popular investment option. These standards direct the most extreme sum that can be saved in a decent store account, guaranteeing straightforwardness and consistence.
With a minimum opening deposit of INR 100, tax-saving fixed deposits provide a versatile investment opportunity. Investors at the top of the spectrum can invest up to INR 1.5 lakh per fiscal year in such deposits and take advantage of potential tax advantages.
Limit on Credit Card Bill Payments
If you pay your credit card bills in cash, there may be restrictions that prevent you from using cash to pay extremely high credit card bills. For Mastercard (VISA) bill installments through SBI, the recommended outlay limit remains at INR 50,000, with a going with per exchange cap of INR 25,000, and HDFC is INR 49,000. For the most part, all of the banks have the same limit for bill payments.