This is the limit for transactions in a bank account, know the rules or else you may be fined…

)New Delhi: The Modi government at the Center has made strict rules on cash transactions to promote digital payments, curb tax evasion and tackle money laundering. The Income Tax Act imposes limits on cash receipts, withdrawals and spending, non-compliance of which attracts a penalty. Some limits apply to cash transactions Cash receipt limit – Under section 269ST of the Income Tax Act, no person is allowed to receive an amount of Rs 2 lakh or more in cash. It is not permissible to take an amount of Rs 2 lakh or more in cash from any person in a day. In relation to a single transaction. In relation to a transaction related to an event or occasion from a person.

Exceptions to this rule include cash received by account payee cheque/draft, electronic clearing system or from the government, banks, post offices and certain other specified entities. Violation of section 269ST attracts a penalty equal to the amount of cash received. Cash withdrawal limits and TDS For cash withdrawals, section 194N of the Income Tax Act imposes the following limits and TDS rates. If the total cash withdrawal in a financial year exceeds Rs 1 crore, a 2 per cent TDS is applicable. For individuals who have not filed income tax returns for the last three years: 2 per cent TDS on withdrawals above Rs 20 lakh 5 per cent TDS on withdrawals above Rs 1 crore Certain entities such as the government, banks, post offices and business correspondents are exempt from these TDS provisions. Cash deposit limits For individuals holding savings accounts, cash deposits of Rs 10 lakh or more within a financial year need to be reported to the tax authorities. For current accounts, the limit is higher at Rs 50 lakh.

While these deposits are not taxed immediately, financial institutions are required to report such transactions to the Income Tax Department for monitoring purposes. Restrictions on Cash LoansThe Income Tax Act also regulates cash loans through sections 269SS and 269T. Section 269SS prohibits the acceptance of cash loans exceeding Rs 20,000.

Section 269T prohibits repayment of loans exceeding Rs 20,000 in cash. Violation of these provisions can attract a penalty equal to the loan amount. Cash gifts and fixed deposits Cash gifts of less than Rs 50,000 in a financial year are exempt from tax. However, gifts received from non-relatives in excess of this limit are taxable. For fixed deposits, there is no maximum cash limit, but TDS at the rate of 10 per cent is applicable if the interest income exceeds Rs 40,000 for individuals and Rs 50,000 for senior citizens.

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