Tax on cash deposit and withdrawal; Everything you need to know

Tax on cash deposit and withdrawal

Tax on cash deposit and withdrawal: Understanding the nuances of Tax Deducted at Source (TDS) on cash transactions is an integral part of compliance with Indian Income Tax regulations. These laws encompass cash deposits and withdrawals, identified as specified financial transactions within the tax laws of India. The Indian government introduced these measures as part of their broader strategy to oversee large transactions, stimulate digital payments, and mitigate the prevalence of unaccounted money in the economy. Here’s an overview of the critical aspects of TDS related to cash transactions in India. It is important for a customer to know whether there is any tax liability on the amount deposited in a bank and whether his account will be debited with a TDS amount for withdrawals from his bank account.

Taxability Cash Deposits/Withdrawals – Specified Financial Transactions

According to Income Tax Act, some of the transactions are treated as specified financial transactions i.e. if, during a particular financial year, any person is depositing cash aggregating Rs 10 lakh or more in a saving account then the bank will be required to report such transaction. The limit of Rs. 50 lakh is applicable for current account holders.

It is noteworthy for every individual that though the government is not levying any tax on the deposit of hard-earned money of individuals, if the transaction is done above the specified limit during the financial year then such transaction will be reported by banks as a specified financial transaction to Income Tax authorities.

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