In 2025, the Indian Income Tax Department has continued to monitor high-value cash transactions closely to curb tax evasion, money laundering, and unaccounted wealth. As part of this effort, strict limits and reporting requirements are in place for cash deposits and withdrawals, particularly in savings and current accounts.
Cash Deposit Limits in Savings & Current Accounts
- Savings Account:
If total cash deposits exceed ₹10 lakh in a financial year (April–March), the bank must report this to the Income Tax Department. - Current Account:
The threshold is higher at ₹50 lakh per financial year.
💡 Note: These limits are for aggregate deposits across all branches of a bank linked to your PAN.
TDS on Cash Withdrawals – Section 194N
- If ITRs are filed (last 3 years):
- No TDS for withdrawals up to ₹1 crore/year.
- 2% TDS if withdrawal exceeds ₹1 crore.
- If ITRs are not filed (last 3 years):
- 2% TDS for withdrawals above ₹20 lakh.
- 5% TDS for withdrawals above ₹1 crore.
📌 TDS deducted under Section 194N can be claimed while filing your ITR.
Cash Receipt & Loan Rules – Sections 269ST, 269SS, and 269T
- Section 269ST:
Prohibits receiving ₹2 lakh or more in cash from a single source in a day or for a single transaction. Violations may incur 100% penalty. - Sections 269SS & 269T:
Cash loans or repayments exceeding ₹20,000 are not allowed. Violations invite penalties equal to the transaction amount.
Cash Gifts & Taxation
- Cash gifts up to ₹50,000 in a financial year are exempt from tax.
- Gifts from relatives (parents, spouse, siblings, in-laws) are not taxable, regardless of the amount.
Other Transaction Limits
| Type of Transaction | Limit (₹) |
|---|---|
| Single cash deposit (PAN required) | ₹50,000 |
| Daily cash transaction limit (bank discretion) | Usually ₹2 lakh |
| Credit card bill payment (cash) | ₹25,000–₹50,000 (bank-dependent) |
| Fixed deposit (tax-saving) | Up to ₹1.5 lakh per year |
| Property purchase (cash limit) | Max ₹20,000 in cash (as per Section 269SS) |
How the Income Tax Department Tracks Deposits
- Form 26AS and AIS (Annual Information Statement) will reflect high-value transactions reported by banks.
- You may receive notices under Section 142(1) or 143(2) if you cannot explain the source of funds.
What Happens if You Can’t Explain a Large Cash Deposit?
If you’re unable to prove the legitimate source of your cash deposits:
- The amount may be taxed under Section 68 at 60%, plus 25% surcharge and 4% cess.
- Additional penalties under Section 271DA may apply.
Business Deposits Under Section 44AD/44ADA
- Deposits aligned with declared turnover are not penalized.
- Deposits that don’t match business income may invite scrutiny and penalties.
FAQs (Frequently Asked Questions)
- What is the cash deposit limit in a savings account per year?
₹10 lakh. Anything beyond that gets reported to the Income Tax Department. - Can I deposit ₹50,000 in cash daily?
Yes, but for deposits ≥ ₹50,000, PAN is mandatory. - Is cash deposit taxable?
Not directly. But unexplained cash may be taxed at 60% + surcharge + cess. - Are current account holders subject to the same rules?
No. The limit for current accounts is ₹50 lakh/year. - Will I get a notice for depositing ₹10 lakh or more?
Possibly. You must be ready to prove the source of funds. - What if I withdraw ₹1 crore from multiple banks?
TDS applies per bank. You can withdraw ₹1 crore from each bank without TDS, if ITRs are filed.
Conclusion
Navigating cash transactions in 2025 requires awareness and compliance. Understanding these limits helps individuals and businesses avoid unwanted tax scrutiny and maintain financial transparency. When in doubt, consult a tax advisor to ensure you’re on the right side of the law.
