Income Tax: A 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.
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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 introduce you to the rules of cash deposit.
If you fail to disclose your source of income, you will have to pay 60% tax
According to Section 68 of the Income Tax Act, the Income Tax Department has the power to issue notices against those who fail to disclose their source of income and start recovering 60 percent of the tax. The government has been constantly trying to make people use as little cash as possible. Efforts are being made to curb money laundering, tax evasion and illegal financial activities by imposing a cash deposit limit in savings accounts.
Information will have to be given on depositing cash more than Rs 10 lakh
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 above the limit. Also, if you are successful in giving the correct information, then you do not have to pay any tax.
2% TDS will be deducted on withdrawal of more than Rs 1 crore
Section 194N of the Income Tax Act states 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.
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