Income Tax: Many rules of income tax also apply to your bank account deposits and withdrawals. You should be careful not only while depositing cash but also while withdrawing it.
Income Tax: Bank account is for managing your money. You keep depositing and withdrawing money in it. However, your bank account is bound by many rules. If you make a mistake in this, you may have to pay up to 60 percent tax. According to the Income Tax Department, if you deposit cash in your account and fail to disclose the source of income, then this huge tax will be recovered from you, which includes 25 percent surcharge and 4 percent cess. Let us make you familiar with the rules of cash deposit.
If you are unable to disclose the source of income, you will have to pay 60 percent tax
According to Section 68 of the Income Tax Act, the Income Tax Department has the power to issue a notice against not being able to disclose the source of income and start recovering 60 percent tax. The government has been constantly trying to make people use cash in minimum numbers. By imposing cash deposit limit in savings account, efforts are being made to stop money laundering, tax evasion and illegal financial activities.
Information will have to be given on depositing more than Rs 10 lakh in cash
According to the Income Tax Act, if you deposit more than Rs 10 lakh in a financial year in a savings account, then you will have to inform the tax authorities. This limit is Rs 50 lakh in a current account. However, it is important to know that there is no immediate tax on depositing cash more than the limit. Also, if you are successful in giving the correct information, then no tax has to be paid.
2% TDS will be deducted on withdrawal of more than Rs 1 crore
Section 194N of the Income Tax Act says that 2% TDS will be deducted on withdrawing more than Rs 1 crore from the bank account. However, if you have not filed ITR for the last 3 years, then you will have to pay 2% TDS only on withdrawing more than Rs 20 lakh and 5% TCS on withdrawal of more than Rs 1 crore.
