Cash Deposit Limit in Savings Account: Income Tax Rules, SFT Reporting & Notice Risks
Wondering how much cash you can deposit into your savings account without getting an Income Tax notice? Understand Section 269ST, the ₹10 Lakh SFT reporting threshold, and PAN rules.
- There is no strict legal ceiling on depositing cash, but deposits aggregating to ₹10 Lakh or more in a financial year trigger automated SFT-004 reporting to the Income Tax Department.
- Under Section 269ST, accepting cash of ₹2,00,000 or more from a single person in a day is strictly prohibited and attracts a 100% penalty.
- Depositing more than ₹50,000 in cash in a single day mandates quoting your PAN or submitting Form 60.
- Income Tax notices are triggered not by the cash deposit itself, but by a mismatch between the deposited cash and your declared ITR income.
Almost every Indian taxpayer has experienced this exact moment of hesitation at the bank counter: you have sold an ancestral plot, received cash gifts at a family wedding, or collected rent from tenants, and as you hold a stack of ₹500 notes, you wonder—"Agar maine yeh paisa account me daal diya, toh kya Income Tax Department ka notice aa jayega?"
There is immense confusion between what is illegal and what is simply reported. Let us break down the exact legal limits, the Reserve Bank of India (RBI) guidelines, and the Income Tax Act sections that govern cash deposits in India.
1. The ₹10 Lakh Threshold: Statement of Financial Transactions (SFT)
Under Section 285BA of the Income Tax Act, scheduled commercial banks, regional rural banks, and cooperative banks are legally mandated to submit an annual report called SFT-004 to the Director of Income Tax (Intelligence and Criminal Investigation).
| Account Type | Annual Cash Aggregation Threshold | Reporting Form Code |
|---|---|---|
| Savings Bank Accounts (All accounts linked to one PAN) | ₹10,00,000 or more in a financial year | SFT-004 |
| Current Accounts | ₹50,00,000 or more in a financial year | SFT-005 |
| Time Deposits (Fixed Deposits / Term Deposits) | ₹10,00,000 or more in cash or renewals | SFT-003 |
Crucial Insight: Crossing ₹10 Lakh does not mean you have broken any law! It simply means the computer systems at your bank flag your PAN and send the transaction summary to the tax department's Annual Information Statement (AIS) portal.
2. The ₹50,000 Daily Rule (Rule 114B)
Under Rule 114B of the Income Tax Rules, 1962, whenever you walk up to a teller counter or Cash Deposit Machine (CDM) to deposit more than ₹50,000 in cash in a single day, you are legally required to quote your Permanent Account Number (PAN). If you do not have a PAN, you must submit Form 60 along with government-approved identity and address proof.
3. Section 269ST: The ₹2 Lakh Cash Transaction Ban
Introduced to curb black money circulation, Section 269ST dictates that no person shall accept or receive an amount of ₹2,00,000 or more in cash:
- In aggregate from a person in a single day; or
- In respect of a single transaction; or
- In respect of transactions relating to one event or occasion from a person.
Penalty Warning: If you violate Section 269ST, the penalty under Section 271DA is equal to 100% of the cash amount received!
4. How to Safeguard Yourself from Scrutiny
If you genuinely have cash to deposit (such as agricultural income from selling crops, business cash sales, or accumulated household savings), follow these three golden rules:
- Maintain a Source Trail: Keep mandi sale slips (J-forms), gift deeds, or rental agreements.
- File Your ITR Annually: If your ITR declares an annual gross income of ₹15 Lakh, a cash deposit of ₹6 Lakh raises no suspicion. However, if your ITR reflects ₹2.5 Lakh income and you deposit ₹8 Lakh in cash, automated risk management algorithms will issue a notice for verification under Section 142(1).
- Verify Your AIS & 26AS: Log in to the official Income Tax portal (
eportal.incometax.gov.in) and review your Annual Information Statement (AIS) under the "SFT Information" tab to verify that the reported figures match your passbook.
Frequently Asked Questions
Will I get an Income Tax notice if I deposit ₹5 Lakh cash into my savings account?
Not necessarily. While a single deposit of ₹5 Lakh requires your PAN card at the counter, it will only trigger an inquiry if your total annual taxable income declared in your ITR is significantly lower than the deposited amount and you cannot explain the legitimate source.
What is the annual cash deposit limit under SFT-004?
Under Section 285BA of the Income Tax Act, banks must report to the tax department any individual whose cumulative cash deposits across one or more savings accounts reach or exceed ₹10,00,000 within an April 1 to March 31 financial year.
Can I deposit ₹2 Lakh cash in one day into my own savings account?
Yes, into your own account you can deposit cash if you quote your PAN card. However, under Section 269ST, you cannot receive or accept ₹2 Lakh or more in cash from any other party or business entity in a single transaction.