New Banking and Tax Rules: What You Need to Know:

New Banking and Tax Rules: What You Need to Know From May 1, 2025, there are stricter regulations regarding banking transactions and fixed deposits (FDs). The regulations enable the government to trace money and curb tax evasion. One needs to be aware of these regulations to avoid receiving notices from the Income Tax Department. Bank Deposits and Withdrawals It is important for every citizen to know the details regarding the Income Tax rules related to depositing and withdrawing money in the bank and FD. With the help of this, you can avoid unnecessary tax notices and penalties:

Information	Description
Cash Deposit/Withdrawal Limit (Savings A/c)	Rs.10 lakh (in a financial year)
TDS Deduction Limit on FD (Normal Citizens)	Rs. 50,000 (in a financial year)
TDS Deduction Limit on FD (Senior Citizens)	Rs. 100,000 (in a financial year)
TDS Rate on FD (With PAN)	10%
TDS Rate on FD (Without PAN)	20%
SFT Reporting Limit in Bank	Deposits above Rs. 10 lakh (in a financial year)
TDS on Cash Withdrawal (ITR Not Filed)	2% above Rs. 20 lakh, 5% above Rs. 1 crore
TDS on Cash Withdrawal (ITR Filed)	2% above Rs. 1 crore
Tax Saver FD Exemption (Section 80C)	Up to Rs. 1.5 lakh

 

What This Means For You:

• This Rs. 10 lakh cap is on all your bank accounts put together
• These large transactions are called "High Value Transactions."
• If the Income Tax Department asks how this money has been earned, you'll have to explain
• If you can't account for the money's source, you may be forced to pay additional tax and penalties

Fixed Deposits (FDs)

TDS on Interest From FDs:

• Regular citizens: TDS (Tax Deducted at Source) applies if your yearly interest exceeds Rs. 50,000
• Senior citizens: TDS applies if your yearly interest exceeds Rs. 100,000
• TDS rate: 10% if you provide your PAN card number, 20% if you don't

Other FD Rules:

• If your total FD amount is more than Rs. 10 lakh, the bank will report this to the Income Tax Department
• You must file an Income Tax Return (ITR) if your interest income is more than the tax-free limit
• Tax saver FDs can give you tax benefits up to Rs. 1.5 lakh under section 80C

You Might Get a Notice If:

• Your interest income is above the exempt limit, and you have not filed your ITR
• You deposit a huge sum in an F,D but are unable to account for where the funds came from
• The Income Tax Department believes you're concealing income

Cash Withdrawal Rules

TDS on Cash Withdrawals (2025): If you haven't filed ITR for the last 3 years:

• 2% TDS on cash withdrawals above Rs. 20 lakh 5% TDS on withdrawals above Rs. 1 crore

If you have filed ITR:

• 2% TDS on withdrawals above Rs. 1 crore

These rules don't apply to government institutions, banks, post offices, and certain agents.  

Why These Rules Matter

The government wants to:

• Make money transactions more transparent
• Reduce tax evasion and black money
• Ensure everyone pays their fair share of taxes

Remember, banks now automatically report large transactions to the Income Tax Department. Understanding these rules helps you manage your money better and avoid unexpected tax notices.