While there is no limit on deposits in a savings account, large amounts of money deposited into the account can attract attention. Banks are required to report large deposits to the Income Tax Department. If a deposit of ₹10 lakh or more is made in a savings account in a year, it may need to be reported. Additionally, if there are continuous large deposits with no clear source, they may be considered suspicious by the Income Tax Department, potentially leading to a notice.
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Here are the key rules for transactions in a savings account to keep in mind:
1. Watch for Large Transactions
- If you make a large transaction, such as ₹10 lakh or more, the bank may report it to the Income Tax Department. If this transaction lacks a clear source, you could receive an Income Tax notice.
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2. Continuous Large Transactions
- If your account shows frequent large transactions throughout the year, the bank may flag these as suspicious and report them to the Income Tax Department.
3. Provide Complete Information
- For large transactions, ensure that you have full documentation of the source of the funds. You must be able to clarify where the money came from. If the money is from a third party, make sure to keep detailed records.
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4. PAN and KYC Requirement
- For large transactions, you must complete the PAN card and KYC (Know Your Customer) process. If you have not completed these steps, the bank may block the transaction.
5. Regular Monitoring by Banks
- Banks monitor activities in your account, especially large or unusual transactions. In such cases, the bank may issue a notice requesting information about the source of the funds.
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By following these rules, you can avoid unnecessary scrutiny from the Income Tax Department and make transactions smoothly without facing any issues.
