Learn how much money you can keep in a savings account in India, including cash deposit rules, tax implications, and benefits of alternative investments.
In today’s world, everyone needs a savings account. A bank account is essential to take advantage of all government schemes and facilitate digital transactions.
Unlike some countries, opening a bank account in India is unrestricted. This convenience can lead to people having two or more accounts.
Your money remains safe in a savings account, and banks typically offer interest on your deposited amount.
Most accounts have a minimum balance requirement, except for zero-balance accounts, and there are penalties for falling below it.
However, there’s no upper limit on how much you can keep in your savings account. Let’s delve deeper into this.
Cash Deposit Limit
Technically, there’s no Cash Deposit Limit in your savings account. However, if you deposit a large sum, you’ll need to explain the source of that income under income tax regulations.
Cash Deposit Rules
When depositing cash, there are some rules to keep in mind:
- For deposits of ₹50,000 or more, provide your PAN number.
- The daily cash deposit limit is ₹1 lakh, increasing to ₹2.5 lakh if you don’t regularly deposit cash.
- Individuals can deposit a maximum of ₹10 lakh per financial year across all their accounts.
Tax Implications
If you deposit more than ₹10 lakh in cash during a financial year, the bank will report it to the Income Tax Department.
You’ll then need to explain the source of this income. Failure to provide satisfactory information may lead to penalties.
Alternative Options
Consider alternative investments like recurring deposits (RDs) or other investments for better returns instead of keeping a significant amount of money idle in your savings account.
While there’s no upper limit to how much you can keep in your savings account, it’s essential to understand the cash deposit rules, tax implications, and benefits of alternative investments.