Savings Bank Account Deposit Rules: Very few people know how much money can be kept in a savings account? Is there any limit to it? And if more than the limit is kept, is there any tax or penalty? Let us know the answers to all these questions in detail.
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There is no limit on bank deposits
The Reserve Bank of India (RBI) has not set any limit on the maximum amount of money to be kept in a savings bank account. That is, any person can keep as much money as he wants in his savings account. It completely depends on the person’s wish and the bank’s policy.
Bigger balance means more hassle
Banks generally do not recommend keeping very large amounts of money in savings accounts, especially when the amount remains parked for a long period without any transactions.
Do you know these tax rules?
If you have deposited ₹10 lakh or more in cash in a savings account in a financial year (FY), the bank reports that information to the Income Tax Department. Information is also given to the tax department if you deposit ₹10 lakh or more in a fixed deposit (FD).
Know these rules of interest too
If the interest on your savings account exceeds ₹10,000 in a year, it is considered taxable income and you may have to pay tax on it.
Relief to senior citizens
The tax limit for senior citizens in case of interest earned from savings account is up to ₹50,000.
Can you get a tax notice?
If you keep too much money in your savings account and it does not match your income profile, then the Income Tax Department may ask you for an explanation. In such a situation, it is important that you have the correct source and documents of the money.
Disadvantages of keeping too much money?
The interest on savings accounts is very limited (usually 2.5% to 4%), while options like FDs or mutual funds can give higher returns. Therefore, keeping more money than needed in a savings account results in less interest on your capital.
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