Large cash deposits in savings accounts attract tax scrutiny despite higher reporting thresholds

Tax authorities are increasingly scrutinising large cash deposits in savings accounts, with scrutiny extending to smaller sums that appear suspicious, emphasising the importance of transparency and documentation for taxpayers.

Many bank customers keep large balances in savings accounts for convenience or safety, but tax advisers say it is the source of the money, not the balance alone, that matters. Informalnewz.com says the issue often comes to the attention of the tax department when cash deposits or transaction patterns look unusual compared with a person’s declared income.

According to Livemint and Business Standard, banks are required to report cash deposits of ₹10 lakh or more in a savings account during a financial year, while the reporting threshold for current accounts is ₹50 lakh. That reporting requirement does not mean smaller sums are automatically safe: Livemint reports that deposits below ₹10 lakh can still prompt scrutiny if they appear suspicious or inconsistent with a taxpayer’s normal banking pattern.

The key risk, tax experts say, is not merely crossing a fixed figure but failing to explain the money. Livemint and Moneycontrol note that repeated large cash deposits, discrepancies between income and deposits, and transactions that do not fit a person’s usual financial behaviour can lead to questions from the Income Tax Department. Business Standard adds that even legitimate deposits may draw attention if taxpayers cannot show a clear source for the funds.

Informalnewz.com also says a notice may follow if a taxpayer has not filed an income tax return, has not linked a PAN to the account or is involved in other suspicious activity. The practical advice across the reports is consistent: keep records, make sure deposits match declared income and be ready to document the source of any large cash inflow.