Millions of people in India have savings accounts with banks. Savings accounts are widely used to store salaries, business income, or other savings. However, it's important to be aware of certain Income Tax Department regulations when depositing large sums of money into a savings account. In particular, large cash transactions may attract the attention of the Income Tax Department.

Keeping more than a certain amount in a savings account doesn't result in a direct notice from the Income Tax Department. However, if a savings account has a total deposit of ₹10 lakh or more in a financial year, the bank must inform the relevant authorities. For current accounts, this limit is ₹50 lakh. Therefore, having the correct sources and documentation is essential for large transactions.

If the transactions in your bank account are consistent with your income and you've provided accurate income information in your ITR, a notice won't be issued simply because of a large amount in your account. However, if there's a significant discrepancy between the reported income and the transactions in your account, the Income Tax Department may request an explanation.

Frequent large cash transactions, unclear sources of income, large financial transactions without filing an ITR, or inaccuracies in PAN-related information can also trigger scrutiny of taxpayers' transactions. If any suspicious transactions are discovered, the individual may be asked to explain.

Therefore, more important than simply keeping money in a savings account is knowing the source of the money and whether it's properly recorded and reported on your tax return. It's important to understand bank regulations and income tax rules when making large transactions.

PC: Aaj Tak