Rules for savings accounts: Avoid making large deposits into your bank account to avoid receiving a tax notification.

Rules for savings accounts: Have you ever questioned how much money you can put into your savings account throughout a business year? There is a provision in the tax law that allows you to receive a warning from the tax department if you deposit more than the permitted limit during a business year. This limit is up to Rs 10 lakhs. You may be required to pay tax on deposits of more than Rs 10 lakh made in a savings account between April 1 and March 31 of each business year.

If you deposit more over Rs 10 lakh, you must notify the Income Tax Department of this. This restriction applies to each of your savings accounts, not just one. Banks report the specifics of such transactions at their level.

Rules for savings accounts : What will happen to deposits greater than Rs 10 lakh?

Deposits of more exceeding Rs 10 lakh are classified as high-value transactions. In such cases, banks or financial institutions are required by law to report such deposits to the Income Tax Department. It is also required to give PAN for deposits of Rs 50,000 or more every day. If someone does not have a PAN, they must file Form 60/61.

Rules for savings accounts: What happens to the interest on deposits?

Let us also inform you that if you earn more than Rs 10,000 in interest on bank deposits in a business year, you will be taxed in accordance with the predetermined slab. If the interest collected from bank deposits in a business year is less than Rs 10,000, Section 80TTA of the Income Tax Act allows for a tax exemption. Section 80TTB allows senior citizens to receive a tax exemption on interest up to Rs 50,000. To get this limit, add the interest earned on deposits in all of your bank accounts.

What should you do if you receive such a letter from the tax department?

If you receive a warning from the Income Tax Department regarding a high-value transaction, you must first give sufficient documentation to support it. Bank statements, investment records, and inheritance paperwork may be requested. It is best if you contact with a competent tax advisor about this.

In terms of monetary transactions, section 269ST states that no person may transact more than Rs 2 lakh with anyone in a single day.

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