Bank Account under Income Tax : Questions and Answers
Many times we come with questions like What kind of bank accounts should be maintained? How many bank accounts should be maintained? Is it mandatory to give the bank account details in Income tax? Is disclosing details of all bank account is compulsory? How much money can we deposit in bank? Can Income Tax Department verify the bank details given by the individual? Can you verify your Income Tax Return (ITR) through bank account? What are the deductions given to individual regarding bank account? Lets answer all one by one.
Q. What kind of bank accounts should be maintained?
ANS. There is no compulsion on the type of account to be maintain. It entirely depend on the choice of individual. It is advisable for Individual with steady income like salary employees should maintain a saving account whereas individual with business income should prefer current account.
Q. How many bank accounts should be maintained?
ANS. According to Income Tax Act, one bank account whether saving or current is compulsory for all. However, there is no limit on maintenance of number of accounts in income tax. It depends on individual how much account he/she wants to keep. But the person has to clearly justify the requirement for more number of accounts, if asked.
Q. Is it mandatory to give the bank account details?
ANS. Yes, it is mandatory to give the bank account details under Income Tax Return. Details like:-
|Name of the Bank|
|Address of the bank|
Q. Is disclosing details of all bank account compulsory?
ANS. Yes, it is important to disclose details of all bank account a person have, whether saving or current account.
Q. How much money can we deposit in bank account?
ANS. There is no limit of deposit in a bank account. However, it is advisable to deposit less than 2 lacs in a day. Also, being on safe side never deposit more than 10 lacs in a Saving Bank account and more than Rs 50 lakh in Current Account, Specially if it’s newly open bank account. Banks usually receive query from Income Tax department for newly opened savings account if there is any such activity. Income Tax department will keep an eye on you when you deposit more than the specified limit in cash. You can deposit any amount through cheque.
Q. Is PAN Card required for depositing cash in bank account?
ANS. If an individual is depositing upto Rs 50,000 in cash per transaction, he/she can deposit without giving PAN Card. And if an individual is depositing above RS 50,000 in cash per transaction threshold he/she have to give PAN card. Further if an individual has deposited above Rs 2.5 lakhs in cash in aggregate, he/she will have to mention PAN Card and will have to explain the source of income in FORM26AS.
Q. Can Income Tax Department verify the details given by the individual?
ANS. If your bank account is not integrated with the e-filing portal then the Income Tax Department will validate the bank account itself from the details filled up by you.
Q. Can you verify your ITR through bank account?
ANS. Yes, Income Tax Department allows you to e-verify your income tax return using bank account. This facility is provided by only selected banks.
Q. How can an individual e-verify his/her ITR through bank account?
ANS. After filing ITR, you can verify ITR within 120 days. There are six method 5 electronic and 1 physical method. The methods are:-
- Via Adhaar based – OTP
- Generating EVC via Net Banking
- Generating EVC via Bank Account
- Verifying tax-returns through demat account
- Generating EVC through your bank ATM
- Sending signed ITR-V/ Acknowledgement receipt
Q. What are the deductions given to individual regarding bank account?
ANS. Under Section 80TTA, Interest on savings deposit with Banks & Post Offices is allowed as deduction, subject to maximum limit of Rs 10,000 per annum for Individual (having age less than 60 years) and HUF (Resident/NR).
Q. What are the deductions given to Senior Citizens regarding bank account?
ANS. Under Section 80TTB Interest on savings deposit with Banks, Post Offices and others in case of Senior Citizens (having age above than 60 years) is allowed as deduction, subject to maximum limit of Rs 50,000 per annum.
Q. What are the other benefits of Bank Account?
ANS. Other benefits are:-
- An individual having business income can pay through any other mode other than cash. Net banking, account payee check, Electronic clearing system (ECS) can add those payment as an admissible expenses while calculating their income.
- Under section 80GGA, an individual having business income can give donations exceeding Rs 2,000 through any other mode other than cash. Net banking, account payee check, ECS gets deduction of amount of donation.
- Under section 80GGB/80GGC, company/any other person giving donations to political parties, electoral trust through Net banking, account payee check, ECS, or any other mode other than cash gets deduction of amount of donation.
Important Points to Note
1. There are different nature of accounts available in banks like Savings account/Current account/ Cash Credit Account/ Overdraft account etc. If you have a clear and genuine reason for having more than one account, you can open the same.
2. But irrespective of any number of accounts opened, a person will be allotted only one unique customer ID which is as per RBI guidelines.
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The author of above article is Krittika Pahwa.
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