With increasing digital surveillance and stricter compliance norms, understanding bank transaction limits in India 2026 is critical for every account holder. Whether you are a salaried employee, a business owner, or a freelancer, the Income Tax Department is closely monitoring high-value cash movements through the Statement of Financial Transactions (SFT).
Many individuals are confused about how much money they can deposit or withdraw without attracting a tax notice. In 2026, banks are mandated to report specific high-value transactions to the tax authorities, and failing to justify these can lead to scrutiny.
Cash Deposit Limits in Savings Accounts
There is often a misconception that you cannot deposit more than a certain amount in your bank account. In reality, there is no legal limit on the amount you can deposit, but there is a reporting threshold that triggers an alert to the Income Tax Department.
According to current RBI and tax guidelines, banks must report cash deposits aggregating to ₹10 lakh or more in a savings account during a financial year. If your deposits exceed this limit, the details will appear in your Annual Information Statement (AIS).
Key Rules for Cash Deposits:
- ₹10 Lakh Limit: Aggregate cash deposits of ₹10 lakh or more in a financial year (savings account) are reported to tax authorities.
- Current Accounts: The reporting limit for current accounts is generally ₹50 lakh.
- PAN Requirement: Quoting your PAN is mandatory for any cash deposit exceeding ₹50,000 in a single day.
Cash Withdrawal Limits & TDS (Section 194N)
While you can withdraw your own money from the bank, excessive cash withdrawals can attract Tax Deducted at Source (TDS) under Section 194N. This rule is designed to discourage cash transactions and promote a digital economy.
If you have filed your Income Tax Returns (ITR) for the last three years, TDS is applicable only if your cash withdrawals exceed ₹1 Crore in a financial year. However, for non-filers, the rules are stricter.
| ITR Filing Status | Withdrawal Amount | TDS Rate |
|---|---|---|
| ITR Filed (Last 3 Years) | Above ₹1 Crore | 2% |
| ITR Not Filed | ₹20 Lakh to ₹1 Crore | 2% |
| ITR Not Filed | Above ₹1 Crore | 5% |
It is important to note that this TDS is not an extra tax but an advance tax. You can claim it as a refund while filing your ITR if your total tax liability is lower than the deducted amount.
High-Value Transactions Monitored by Income Tax
Apart from basic cash deposits and withdrawals, several other transactions are reported by financial institutions under the SFT framework. These transactions are automatically reflected in your Form 26AS and AIS.
- Fixed Deposits (FD): Cash deposits in FDs exceeding ₹10 lakh are reported.
- Credit Card Payments: Payments of ₹1 lakh or more in cash, or ₹10 lakh or more through digital modes (NEFT/UPI/Cheque) towards credit card bills.
- Property Transactions: Purchase or sale of immovable property valued at ₹30 lakh or more.
- Investments: Investments in shares, mutual funds, or bonds exceeding ₹10 lakh.
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The ₹2 Lakh Cash Transaction Limit (Section 269ST)
One of the most critical rules to remember in 2026 is Section 269ST of the Income Tax Act. This section prohibits any person from receiving an amount of ₹2 lakh or more in cash:
- From a single person in a day;
- In respect of a single transaction; or
- In respect of transactions relating to one event or occasion.
Violating this rule attracts a penalty equal to 100% of the cash received. For example, if you accept ₹5 lakh in cash for a sale, you may be penalized ₹5 lakh by the tax authorities.
Frequently Asked Questions
Can I deposit ₹5 lakh cash in my savings account?
Yes, you can deposit ₹5 lakh cash. Since it is below the ₹10 lakh annual reporting threshold, it may not be automatically flagged, but you must still be able to explain the source of funds if asked.
Is bank interest taxable in 2026?
Yes, interest earned on savings accounts, FDs, and RDs is fully taxable under "Income from Other Sources." However, under Section 80TTA, individuals can claim a deduction of up to ₹10,000 (₹50,000 for senior citizens under Section 80TTB) on savings account interest.
What happens if I receive an Income Tax notice for high-value transactions?
If you receive a notice (often under the e-Verification Scheme), do not panic. Log in to the compliance portal, view the information provided (under the "Campaign" tab), and submit your response confirming whether the transaction relates to you and if the information is correct.
Key Takeaways
- Banks report savings account cash deposits exceeding ₹10 lakh in a financial year.
- TDS on cash withdrawals applies if you withdraw over ₹20 lakh (for non-filers) or ₹1 Crore (for filers).
- Accepting cash of ₹2 lakh or more from a single person/event is prohibited and penalized.
- Always file your ITR on time to avoid higher TDS rates and compliance issues.
Disclaimer
This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax laws are subject to change; please consult a qualified Chartered Accountant (CA) or tax professional before making significant financial decisions.
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