Archive · 21 Jul 2026
Income Tax Dept May Question Cash Deposits Below Rs 10 Lakh
Many people think that if they deposit less than Rs 10 lakh in cash in a year, they won't get a notice from the Income Tax Department.
However, the Rs 10 lakh limit is just a reporting threshold for banks.
The department can still question deposits below this amount if they don't match your declared income or raise red flags.
The department uses various data sources and lower thresholds for specific transactions to flag suspicious deposits.
If you receive a notice, you should provide documents showing the source of your funds and that the income was already reported and taxed.
The Rs 10 lakh limit is a reporting threshold, not a guarantee against scrutiny.
Deposits below Rs 10 lakh can be questioned if they don't match declared income.
Lower thresholds apply for specific transactions, such as Rs 2 lakh for sales.
Unexplained deposits are taxed at a punitive rate of roughly 78%.
Taxpayers should keep documents proving the source of funds to respond to notices.
- Who
- Income Tax Department and taxpayers
- What
- Scrutiny of cash deposits below Rs 10 lakh
- When
- During financial year
- Where
- India
- Why
- To ensure income matching and prevent tax evasion
Taxpayer Perspective
Income Tax Department Perspective
Deposit Threshold
Taxpayer Perspective
Taxpayers believe deposits below Rs 10 lakh are safe from scrutiny.
Income Tax Department Perspective
The department scrutinizes deposits based on income mismatch, not just the Rs 10 lakh threshold.
Reporting Requirements
Taxpayer Perspective
Taxpayers may not be aware of lower reporting thresholds for specific transactions.
Income Tax Department Perspective
The department uses multiple reporting triggers, including lower thresholds for certain transactions.
Income Mismatch
Taxpayer Perspective
Taxpayers argue that their deposits are within their income capacity.
Income Tax Department Perspective
The department flags deposits that appear disproportionate to declared income.
- Reporting Threshold
- Rs 10 lakh for cash deposits in savings accounts
- Punitive Tax Rate
- Roughly 78% under Section 115BBE
- Common Triggers
- Deposits above Rs 2 lakh for sales, Rs 50,000 single-day deposits requiring PAN
- Relevant Sections
- Sections 68, 69, 69A, 142(1), 143(2), 148, 133(6)
- Data Sources
- SFT, TDS, TCS, GST, property registrations, foreign remittance filings