Almost everyone has a savings account. But do you know how much balance you can keep in your account that will not be taxed? Account holders should be aware that banks pay annual interest on the savings account. However, all banks have different interest rates.
Few account holders also don’t know how much money they can keep or withdraw from a savings account during a financial year so that it is not subject to tax? Every year, banks must notify the tax department of customers who withdraw 10 lakh or more from the bank.
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According to tax law, banks must provide information on these accounts during the current financial year. This limit is considered globally for cash deposits of Rs 10 lakh or more during a financial year in one or more accounts (other than current accounts and term deposits).
The cash deposit limit on the checking account is Rs 50,000 or more. Kapil Rana, Founder and Chairman of HostBooks Limited, states that a person should be aware of Income Tax Rule 114E regarding the income and expenses of the account.
Points to note:
1. All private and government banks that allow customers to open accounts fall under the Banking Regulation Act 1949. These banks are required to report on account transactions, especially if Rs 10 lakh or more in cash is deposited into these accounts (except current accounts and term deposits) during the financial year.
2. The Banking Regulation Act 1949 also applies to banks providing credit card service to customers.
People with more than one credit card must make a cash payment of Rs 1 lakh or more in a fiscal year against the invoice. In addition, they will have to pay Rs 10 lakh or more against the invoice by any mode.