Income Tax Department May Send You a Notice If You Deposit This Much Cash in Your Bank Account in a Year – Know the Limits

Thinking of depositing large sums of cash into your savings account? Be careful—doing so beyond a certain threshold could invite scrutiny from the Income Tax Department. There are specific rules in place regarding cash deposits in bank accounts. If violated, they can result in notice, penalties, or even investigations. Here's a complete guide to how much cash you can legally deposit in your account without trouble.

No Limit on Account Balance, But...

You can keep any amount of money in your savings account—there’s no upper limit on your balance. Likewise, there’s no restriction on cheque or online transfers. However, when it comes to cash deposits, that’s where the Income Tax Department becomes cautious.

What Are the Rules for Cash Deposits?

• If you deposit ₹50,000 or more in cash in a single day, you must provide your PAN card.

• You can deposit up to ₹1 lakh in cash per day into your bank account.

• Occasionally, if you are not a frequent depositor, banks may allow a one-time deposit up to ₹2.5 lakh, but it raises red flags.

• Annual Limit: You can deposit up to ₹10 lakh in cash across all your bank accounts in one financial year.

✅ Beyond ₹10 lakh in cash deposits annually? Be ready to explain the source of the funds to the Income Tax Department.

Across All Bank Accounts – Not Just One

The ₹10 lakh threshold is not per account, but across all accounts held in your name (in one or more banks). Whether it’s a single account or multiple, all cash deposits are tracked cumulatively by the IT Department.

What Happens If You Cross the Limit?

If your total cash deposits exceed ₹10 lakh in a financial year:

• The bank is required to report the transaction to the Income Tax Department.

• You may receive a notice asking for details about the source of income.

• If you can’t justify the amount or provide proper documentation in your Income Tax Return (ITR), you might:

  • Face scrutiny

  • Be charged with tax evasion

  • Get penalized with heavy fines

Is Cash Transaction Over ₹10 Lakh Illegal?

No—it’s not illegal to deposit over ₹10 lakh in cash. But transparency is key. As long as you can explain the source of funds with documents (salary, business income, sale of property, etc.), you won’t face problems.

However, instead of keeping large cash reserves idle in your savings account, it’s wiser to convert it into Fixed Deposits (FDs), mutual funds, or other investment options to earn better returns.

In Summary:

• PAN is mandatory for cash deposits ≥ ₹50,000

• You can deposit cash up to ₹10 lakh annually without major scrutiny

• Deposits across all your accounts are counted together

• Go beyond the limit? Keep documentation ready

• Not declaring the source? Be ready for a tax notice or penalty

Stay informed, stay compliant!