Cash Deposit Limit In Bank To Avoid Income Tax Notice

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Friends, in this video we'll discuss the 4 most important questions.

Our first question would be,

what is the maximum amount of cash we can deposit in a year

without income tax notice?

Our 2nd question would be,

how many savings accounts we can open without any notice from income tax?

our third question would be... we'll discuss all these questions deeply,

our 3rd question would be, how many Fixed Deposits I can open,

or how much I can keep money in my FDs

without getting any notice from the IT department,

and our 4th question would be, nowadays we make a lot of UPI transactions,

even the shopkeepers also receive a lot of money through UPI,

so in this case we'll discuss the amount of money that we should deal with through UPI

to avoid an income tax notice.

Now you might ask, where would I get these statistics from?

Am I gonna make up some stories or how will say all these?

you can see all the details on the screen and it's an income tax tutorial,

and let me show you all the details here thoroughly,

I went through this tutorial and prepared this PPT,

after going through the tutorial,

I extracted every detail like the max deposit limit,

as everything is mentioned there,

if you want, you can go through the tutorial,

I'll give you the link in the description box.

Otherwise, I'll cover all the useful main points in this video itself,

as you can see here,

at the beginning of the tutorial, it's written that

the max amount you can deposit in a year is ₹10 lakhs,

if you want to avoid Income Tax Notice.

So like this, I have extracted every detail from this tutorial.

So let's start our 4 questions one by one.

So the first question was-

what is the maximum amount of cash we can deposit in a year?

As it's already mentioned in the Income Tax tutorial,

the maximum amount of money you can deposit or withdraw is ₹10 lakhs.

See, if you want you can do ₹20 lakhs, ₹50 lakhs, or even ₹1 cr,

but if you deposit more than ₹10 lakhs in a year,

then Income Tax may send you a notice,

and if you get a notice, suppose you deposited ₹20 lakhs in a year,

and if you have a proper source of income, then you don't have to worry.

If you deposited ₹20 lakhs in a year,

and you are already paying ITR of ₹25-₹30 lakhs,

then what's the problem? tell me!

but if you are paying an ITR of ₹2.5 lakhs or ₹5 lakhs,

and your deposited amount is ₹15 lakhs,

so in that case when you'd get the Income Tax notice, there would be an issue.

As the Income Tax itself says that

if you're depositing upto ₹10 lakhs cash in a year,

then there's no issue and we are not sending any notice,

but if your transaction exceeds ₹10 lakhs in a year, then you might get a notice.

Now it's not that you have to deposit ₹10 lakhs or ₹11 lakhs at once... no!

Suppose you deposited ₹50k today, tomorrow ₹1 lakh,

then again ₹1.5 lakhs on the next day, then ₹25k again,

if your total deposited amount exceeds ₹10 lakhs in a year,

then you might get a notice from the Income Tax department,

and they may ask you about any transactions,

suppose you deposited ₹1 lakh,

so they may ask you, the source of this transaction of ₹1 lakh,

if you can answer, very well, and if you can't then there would be an issue.

Now there's a thing... in single transactions,

suppose you are depositing sometimes ₹25k and sometimes ₹50k,

it's also written in this tutorial that,

a single transaction that exceeds ₹2 lakhs in a year,

single transactions, suppose you deposited only ₹8 lakhs in a year,

& you're relaxing thinking your amount is less than ₹10 lakhs so there'd be no notice,

but if your single transaction exceeds ₹2 lakhs,

suppose you deposited ₹3 lakhs at once,

then gradually you deposited some amounts and in total, you deposited ₹8 lakhs,

then also you might get a notice,

as it's written clearly that if a single transaction exceeds ₹2 lakhs,

then also you might get a notice from the Income Tax.

So be careful of neither depositing nor withdrawing more than ₹10 lakhs in a year,

and no single transaction should exceed ₹2 lakhs,

if you maintain this, then you won't get an Income Tax notice,

otherwise, you should have proper income source proof,

you should know the source of the fund and you should have the ITR, OK!

Now the question is

what is the maximum amount of balance I can have in my savings account?

So there's no upper limit,

whether you keep ₹100 cr or ₹500 cr, you just need to have the source of funds.

After this let's move on to the next question.

NO... before we move on... there are a few things here...

Many people have this question...

see most of people work really hard to earn,

suppose there's a person,

and he saves 2 lakhs in a year by working hard,

and there are lakhs and even crores of people like him in India,

who works hard throughout the year to earn, suppose he's got a small shop,

he earned, and saved an amount in cash,

and gradually, by saving sometimes ₹10k or sometimes ₹20k,

he saved ₹2 lakhs in a year,

and this ₹2 lakhs he deposited in the bank account, ok!

then again a new year starts

& he earned gradually 10-15 thousand rupees & saves ₹2 lakhs throughout the year,

and he deposited this ₹2 lakh in the bank account,

let's assume that every year that person has been depositing ₹2 lakhs each year for 10 years,

so suppose his bank balance has become ₹22 lakhs with the principal and interest,

so will this person get a notice?

No... because this person is depositing ₹2 lakhs every year

and according to the Income Tax,

you are tax-free up to ₹2.5 lakhs.

So if you are depositing small amounts though your bank balance is high,

it doesn't matter that you have ₹20 lakhs in your account today,

but if you deposit more than ₹10 lakhs in a year, then you might get a notice.

I hope you are getting what I'm trying to say.

Ok, So let's move on...

Now the question is...

Suppose this is 2023 and I deposited ₹15 lakhs in my account

Ok, throughout the year,

now the question is, as I've deposited ₹15 lakhs, when will I get the notice?

2024? or 2025? when? there should be a limit right?

So the answer is Income Tax, within the next 8 years...

this is 2023, so within 2031 Income Tax may ask you about this!

there's a possibility of the Income Tax department asking you

about a transaction of 2023 in 2031 through a notice.

So within the next 8 years, you might get a notice at any point in time, ok!

One more thing that many people say- where's the notice?

We deposit every day and IT has other things to do!

See, the population is 135 cr-140 cr,

and the Tax Officers are very limited,

I do agree that notice doesn't come often.

but just talk to those who got noticed!

You keep in mind that...

these Tax Officers are not empathic at all, so we can convince them.

none of them listens to anything and just talk to those who got noticed.

The penalty they impose is a minimum of 60% and the maximum is 400%.

Suppose someone got stuck with a transaction of ₹5 lakhs

and he can't show the details of it,

so 60% of ₹5 lakhs is ₹3 lakhs,

so from ₹3 lakhs to (5*4=20) ₹20 lakhs penalty can be imposed on you.

So this could be the scenario, just imagine,

if the notice doesn't come then it's great but if it does and we can't answer it,

then the Income Tax department imposes very high penalties, ok!

Now let's move on to the next question.

The next question is...

you must have seen that many zero-balance savings account is opening through online,

as many banks open an account online,

so many people get excited that I'd have so many accounts in SBI, Kotak, ICICI,

whoever is providing zero balance account, and people want 4-5-10 accounts,

and then they would ask how many savings accounts we can open max.

So the Income Tax mentions this as well as there's no upper limit,

whether you open 1 account or 20 accounts, it doesn't matter,

until and unless

you are not involved in some illegal activity through these multiple accounts.

So if you are doing it with honesty

and keeping ₹4-5k in each account, then it doesn't matter,

if you have a proper source of income

then whether you open 20 or 500 accounts, doesn't matter,

you can open as many savings accounts as you want,

but, there are some advantages and disadvantages of opening multiple accounts.

Let's discuss this once ok!

Suppose you have multiple accounts, so the first advantage of it is,

that different banks offer different types of discounts,

suppose I'm shopping online,

sometimes there's an offer from SBI and sometimes from ICICI,

suppose I've accounts in every bank, so I can avail of every offer,

so this is the 1st advantage of opening multiple accounts.

2nd is it reduces the dependency on one bank,

for example, when I was posted at Hariyana's Bank,

and in front of the bank, there was a market,

and big trucks used to come there daily,

and every morning around 9:30 am to 10 am,

we used to get cheques worth ₹80 lakhs or 90 lakhs,

and till the check is not clear, the goods were not unloaded from the trucks,

got it! Once what happened, there was an error in the bank's server

and it opened at 3 PM in the noon,

as there was an error in the bank's server, the payee couldn't get the payment,

and as the payments were delayed, those trucks were also waiting,

from morning to noon, trucks were waiting for 6 hours,

and due to the fault in the bank's server,

the shopkeeper had to pay the fees for those 6 hours to the truck owner.

So are you getting it? that depending on a single server,

Now suppose, if he had 2 bank accounts,

apart from our bank's account if he had had another account,

then he could have done his transaction from that other account

as this bank's server was down.

you got the point, but what happened to him in that case,

His dependency was on a single bank which was unable to do transactions,

and he had to wait till the server was up again.

So these are the advantages of opening multiple bank accounts

3rd is, it reduces the risk of fraud,

suppose I have a single bank account, which has ₹10lakhs

and on the other hand, I've 5 accounts and I've kept ₹2lakhs in every account each,

nowadays there are so many online fraud cases

and God forbid if it happens then it exhausts all your balance.

Suppose, if fraud happens with someone here,

then the fraudster will exhaust all the ₹10lakhs.

But if he keeps ₹2lakhs in his 5 banks,

and God forbid if fraud happens, then also it will happen only with one account.

I agree that he might lose ₹2lakhs but his ₹8lakhs would be safe.

So multiple accounts can save you from frauds and this is also an advantage.

And the 4th advantage is the DICGC benefit.

In today's date, the subsidiary body of RBI, DICGC,

provides ₹5lakhs insurance to every client of every bank.

though it provides to every bank, but for an example let's assume the Axis Bank,

and if tomorrow the bank collapse,

then according to the DICGC every client will get ₹5lakhs.

Suppose I've 410lakhs in axis bank, ok!

hypothetically speaking if Axis Bank collapses tomorrow,

then DICGC will pay me ₹5lakhs.

Are you getting my point? if I've ₹2lakhs then they will pay my full ₹2lakhs.

This means if Axis Bank collapses in the future, then the maximum amount DICGC will pay me is ₹5 lakhs.

And this service is applicable for every bank.

Now suppose I've total ₹20lakhs,

and let's suppose, I deposited the whole amount in Axis Bank,

and hypothetically speaking if Axis Bank collapses tomorrow,

then DICGC will pay me only ₹5lakhs max,

so what I'll do in this case, is,

I'll open accounts in 4 different banks for my own safety,

and will deposit ₹5 lakhs in each account.

So if any of these banks collapse tomorrow,

then I'll get my full ₹5lakhs

So this is the DICGC benefit.

You will get this benefit only if you have more than one bank account.

So if there are advantages of multiple accounts then there must be some disadvantages also.

1st disadvantage is if I open 5 bank accounts,

then I have to maintain the monthly average balance in all 5 accounts.

though there are hundreds of 0 balance savings accounts,

and I personally recommend 2 savings accounts in my every video,

1st is Kotak Mahindra's 0 balance savings account and

2nd is AU small finance bank's 0 balance savings account.

I'll give you the link of these 2 savings accounts in the description box below.

if you want to open an account in these as there are no fees, it's 0 for a lifetime,

so I'll give you the link of these 2 savings accounts in the description box below.

now back to the point, if you have 0 balance savings account,

Then it's a different thing, but if you opened multiple MAB accounts,

then you've to maintain the monthly average balance along with the debit card fees every year.

2nd disadvantage of multiple accounts is we are unable to track,

Suppose one account has ₹5k, other one has ₹2k or ₹6k,

so we can't comprehend how much I have or how much to save or how much to spend,

so this is the problem as we loose control over our expenses.

Now let's move on to our 3rd question..

That max how many fixed deposits I can open or how much money I can keep in those FDs,

so that I don't get any Income Tax notice. See

before understanding this it is necessary to understand that in today's date,

If I throughout the year...

suppose I have an FD, ok

so this is the fixed deposit with whatever amount,

and throughout the year, suppose I have 2 Fds, ok!

suppose I earned an interest of ₹15K through these 2 FDs in a year.

Now the IT department says that-

No matter how many FDs you have,

if you have earned more than ₹10K interest in all those FDs in a year

then the bank will charge you 10% as TDS.

and the rest of the amount will be given to you, ok!

Suppose I earned 15K interest in my both FDs,

So the 10% of ₹15K is ₹1500/-.

So this ₹1500 bank will deduct as TDS,

and they will give me the rest ₹13500 plus my principal.

But most of the time people don't calculate,

neither online nor anywhere else,

and think that only ₹13500/- is the interest.

But this TDS is refundable while paying the ITR.

But many times people doesn't even know that their TDS has been deducted.

So you always have to keep in mind that the TDS that is being deducted from you,

the government is deducting TDS

so that when you fill ITR, you can tell your source of income.

But people neglect this thing often.

So just keep in mind that don't open an FD more than ₹10lakhs in a year.

You can open as much FDs as you want but,

the amount of the FD should not exceed ₹10lakhs in a year,

if you want to avoid Income Tax notice, ok!

Now let's move on to the next question

The next question is...

we use a lot of credit cards, ok!

So if you are paying more than ₹1lakh credit card bill in a year,

as we can pay online and we can pay through the branch as well, ok!

Now suppose you want to pay the credit card bill in cash through the branch, ok

So if you pay more than ₹1lakh credit card bill through cash in a year,

then you might get an Income Tax notice to ask you the source of the fund.

And suppose if you pay the credit card bill through online and it exceeds ₹10lakhs,

then also you might get an Income Tax notice.

And it is important because people have turned the credit card into a business,

people are buying stuff for their shop through credit cards,

then they sell them off,

in a repetitive manner.

Credit cards are not for your business,

credit cards are for your individual spendings.

So you can't use it for your business.

Suppose you are ordering stuff worth ₹20lakhs-₹25lakhs through credit card

then you are selling them, I agree that you are earning profits,

but that's counted as your personal expense.

Suppose you are earning ₹5-6lakhs in a year, ok!

and your expense on the credit card is ₹25-30 lakhs.

Though you have paid out

but your expense on the credit card is ₹25-30 lakhs.

And then the notice will come asking you about proof of the fund.

You won't have anything, neither money nor proof,

and the penalty would be so high that you won't be able to pay

then depression and all that so these are the important things that you should know.

Now the last question is how much can we spend through UPI?

See the problem with the UPI is,

You can spend as much as you want through UPI.

Suppose there's a shopkeeper and he has UPI, ok!

He can receive as much as he wants in his account,

whether its ₹1cr or ₹10cr, what's the problem?

He can take other stuff in exchange for the ones he is selling.

As this is not his income because the next day he is gonna buy stuff again.

But he should have a current account

But what they do is

Whatever money they get through UPI gets deposited in their savings account,

so if you receiving so much of amount in your savings account

then it would be counted as your own income.

and you can't run a business with a savings account, so please keep in mind that,

if you are receiving more than ₹10k daily through UPI,

then remove your savings account,

and open a current account if you want to avoid Income Tax notice, ok!

So these were the question whose answers we discussed.

I hope you'd find this video informative.

If you find this video informative then please like and subscribe to the channel.

For now, this is the end of the video,

Thanks for listening and thank you all.