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IndiaTax & ComplianceUpdated: Sep 13, 2026
Direct Answer
Monitor cash deposits closely as banks report aggregate deposits exceeding ࣓10 Lakhs in savings accounts or ࣓50 Lakhs in current accounts to the Income Tax Department via SFT. Ensure all cash deposits match corresponding cash sales or withdrawals in your ledger.
Reporting Limits (SFT)
Under the Statement of Financial Transactions (SFT) rules, banks automatically inform the tax department if you cross specific cash transaction thresholds in a financial year:
- Savings Accounts: Cash deposits aggregating to ࣓10 Lakhs or more.
- Current Accounts: Cash deposits or withdrawals aggregating to ࣓50 Lakhs or more.
How to Prepare for Scrutiny
If your bank statements show high cash deposits, expect it to reflect in your AIS (Annual Information Statement).
- Trace the Source: Every cash deposit must have a clear source. Was it cash sales, a cash loan return, or redeposit of earlier withdrawals?
- Match with Cash Book: Your physical or digital cash book balance must align with the cash deposits. Depositing cash when the cash book shows a negative balance implies unexplained income.
- Avoid Section 269ST Violations: Ensure no single cash receipt from a person in a day, or for a single transaction, exceeds ࣒2,00,000. Violations invite a 100% penalty.
Prefiler Risk Detection
Prefiler automatically aggregates cash deposit lines across all uploaded bank statements and flags when totals approach SFT limits, allowing CAs to preemptively prepare explanations before filing.