How Much Can You Deposit or Withdraw In Saving Account Without Getting Reported?

To meet banking needs, several people from all professions, such as salaried individuals, are required to have at least one savings account, while many also keep various accounts for multiple reasons. However, people with fixed income typically open a savings bank account because that is a place where they can store their money safely while earning some interest on the balance.

Many questions regarding saving accounts occur in an individual’s mind, such as how much money you can put (deposit) into a saving account or How much money you can withdraw from it in a financial year to stay outside the taxman’s radar?

Tax professionals say that the government has made it compulsory for Banks, corporates, Post offices and NBFCs and others to complete the Statement of Financial Reporting (SFT) when transactions in a savings account exceed the mentioned limit to restrain black money and expand the tax base.

Such payments are in respect of cash deposits/withdrawals, investments in shares/debentures/time deposits/mutual funds, credit card expenses, purchases of foreign exchange, transactions in immovable property, etc.

Banks are required under tax laws to report cash deposits and withdrawals of Rs. 10 lakh or more in savings or other non-current accounts during a financial year as part of the Statement of Financial Transactions (SFT). This limit applies on an aggregate basis across all such accounts held by a taxpayer, excluding current accounts and fixed deposits. The information helps the tax department scrutinize the source of funds, identify the nature of transactions, and verify whether due taxes have been properly paid.

Consequently, as cash deposits and withdrawals of Rs 10 lakh or more in a bank account in a financial year need to be reported to the tax authorities, you need to be careful if you are exceeding the mentioned threshold. This limit is Rs 50 lakh and more in the case of current accounts. However, apart from cash transactions, there are some other transactions also which you need to be aware of.

A Founder and chairman says, “A person should consider the nature and value of transactions that fall under the reporting requirement of rule 114E of the Income Tax Act to stay outside the radar of tax authorities when withdrawing or depositing any amount from a savings bank account in a financial year. Therefore, we should be aware of the reportable transactions.”

According to an expert, the below-mentioned need to be reported under Rule 114E of the Income Tax Rules, 1961:

A. Banks, including co-operative banks, that provide bank account services and are subject to the Banking Regulation Act, 1949, are required to report the following transactions:

• Cash deposits totaling Rs 10 lakh or more in a financial year, across one or more accounts (excluding current accounts and time deposits) held by an individual.
• Any cash payments amounting to Rs 10 lakh or more in a financial year for buying bank drafts, pay orders, banker’s Cheques, or prepaid instruments issued by the Reserve Bank of India under Section 18 of the Payment and Settlement Systems Act, 2007

B. Credit card issuing banks or co-operative banks, governed by the Banking Regulation Act, 1949, as well as other companies or institutions, must report the following transactions.

• Payment in cash aggregating to Rs 1 lakh or more in a financial year against the bill raised in respect of one or more credit cards issued.
• Payment done by any mode other than cash aggregating to Rs 10 lakh or more in a financial year against the bill raised in respect of one or more credit cards issued.

C. The Company or institution issuing bonds or debentures needs to report the receipt from any person of an amount aggregating to Rs 10 lakh or more in a financial year for acquiring bonds or debentures issued by the company or institution, except the amount received on account of renewal of the bond or debenture issued by the company.

D. Company which is issuing needs to report receipt from any person of an amount aggregating to Rs 10 lakh or more in a financial year for acquiring shares issued by the company.

E. Under section 68 of the Companies Act, 2013 if a company listed on the recognised stock exchange is purchasing its own securities, it needs to report the buyback of shares (except shares purchased in the open market) of a sum aggregating to Rs 10 lakh or more in a financial year from any person.

F. A Trustee of Mutual Funds who manages the affairs needs to report from any person of an amount totaling Rs 10 lakh or more in a financial year for acquiring units of one or more schemes of a Mutual Fund other than the amount received on account transfer from one scheme to another of that Mutual Fund.

G. An authorised person, as defined in Section 2 clause (c) of the Foreign Exchange Management Act, 1999, is required to report receipts from any individual amounting to Rs 10 lakh or more in a financial year for the sale of foreign currency.

H. The Inspector-General appointed under section 3 of the Registration Act 1908 or the Registrar or Sub-Registrar appointed under section 6 of that Act needs to report the purchase or sale by any person of immovable property of the sum of Rs 30 lakh or more or valued by the stamp valuation authority referred to in Section 50C of the Act at Rs 30 lakh or more.

Therefore, before making any deposit or withdrawal in a bank account, it is important to ensure compliance with the applicable provisions so that the transaction does not fall under those required to be reported under Rule 114E by a banking company, co-operative bank, any other institution, or the trustee of a mutual fund, among others.