There's no legal cap on how much cash you can deposit in your own bank account. But banks report large cash deposits to the Income Tax Department, and if your return doesn't explain where the money came from, a notice follows. Here are the limits that trigger…
| Transaction | Reported when it reaches |
|---|---|
| Cash deposits in savings accounts | ₹10 lakh in a financial year (all your savings accounts with that bank) |
| Cash deposits and withdrawals in current accounts | ₹50 lakh in a financial year |
| Cash paid towards credit card bills | ₹1 lakh in a year |
| Fixed deposits (other than renewals) | ₹10 lakh in a year |
Banks send these figures to the department in their Statement of Financial Transactions (SFT). They appear in your Annual Information Statement (AIS) within months. Reporting isn't a penalty. It only means the department can compare the deposits with the income in your return.
The Income-tax Rules, 2026, notified on 20 March 2026 and in force from 1 April 2026, replaced the old rule that you had to quote PAN for any cash deposit above ₹50,000 in a day. Now PAN is required once your cash deposits or withdrawals add up to ₹10 lakh or more in the year, across one or more accounts.
That makes small deposits easier, but it also means the bank links your yearly cash total to your PAN. Large cash activity is now more visible, not less.
Separately, receiving ₹2 lakh or more in cash from one person in a day, for one transaction or one event, is barred. The penalty equals the amount received. Businesses that take big cash payments from customers run into this more often than into the deposit rules.
Notices for years up to FY 2025-26 still cite the 1961 Act sections. The Income-tax Act, 2025 applies from tax year 2026-27.
The department wants to know the source of the cash. Build a short statement that lists each large deposit with its date, amount and source, and attach proof:
| Source of the cash | Evidence that works |
|---|---|
| Business sales | Cash book, sales register and invoices, matching turnover in your return and GST returns |
| Earlier withdrawals redeposited | Bank statements showing the withdrawal, and a reason the cash came back |
| Sale of property, gold or a vehicle | Sale deed or agreement, and the buyer's details |
| Gift from a relative | Gift deed, the relative's PAN and their bank statement or capacity to give |
| Agricultural income | Land records, sale receipts from the mandi or buyer |
| Household savings | Past income levels and returns that make the savings plausible |
Keep it factual and consistent. Answers that change between letters, or round "savings" figures that don't fit your income history, are what turn a simple query into an addition.
Cash deposits treated as unexplained money are taxed at a flat 60%, plus a 25% surcharge and 4% cess (78% in total), with no deductions or set-offs allowed, and penalties can apply on top. That's why a clear reply at the first stage matters so much.
If the deposits were genuine business receipts you forgot to report, file an updated or revised return where the law still allows it. That's usually far cheaper than waiting for an assessment. See how to file a revised return.
The general steps for any notice are in our income tax notice guide. If you've received a notice about cash deposits, TaxQue's income tax notice service can review your bank statements, prepare the source statement and file the reply.
This article is published by TaxQue (ARB FinTech LLP) for general informational, educational, and business guidance purposes only. Tax laws, GST rules, MCA circulars, and judicial precedents are subject to frequent statutory revisions. This content does not constitute formal individualized tax, accounting, or legal counsel.
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