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No single cash-deposit amount automatically triggers an Income Tax Department notice. Different rules apply to cash deposits, receipts, loans and repayments, and withdrawals. A bank’s report of a transaction is information the Department may use; it does not by itself prove that the money is taxable or guarantee an inquiry.
Why there is no universal cash-deposit limit for a notice
The Income Tax Department’s current cash-transaction overview, which it says reflects the Income-tax Act, 1961 as amended by the Finance Act, 2026, describes several separate restrictions. The relevant threshold depends on the transaction and the provision involved—not simply on how much cash reaches an account.
Keep four different outcomes separate:
- A restriction on a transaction: the law may limit how specified sums can be accepted or repaid in cash.
- Third-party reporting: a bank may have to report a transaction under the Statement of Financial Transactions (SFT) rules.
- Tax deducted at source (TDS): a rule may require tax to be deducted when a person withdraws cash.
- An inquiry or notice: the Department may ask about a transaction based on the facts and information available to it.
These are not interchangeable. A reporting threshold is not a tax-free allowance, a cash-deposit ban, or a formula that predicts whether a notice will arrive. Nor does staying below a stated threshold guarantee that a transaction cannot be questioned.
What the different cash rules cover
The Department’s 2026 overview identifies sections 269SS, 269ST and 269T as restrictions on certain cash transactions. The figures below apply only to the types of transactions covered by those provisions; they are not general limits on depositing cash.
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| Transaction | Threshold described by the Department | What the rule concerns |
|---|---|---|
| Accepting specified loans, deposits or sums — section 269SS | ₹20,000 or more | Specified cash acceptance restrictions. This is not a general cap on cash deposited into a bank account. |
| Receiving specified sums — section 269ST | ₹2 lakh or more | Specified cash receipts, subject to the provision’s scope and exceptions. It is not a savings-account deposit threshold. |
| Repaying specified loans or deposits — section 269T | ₹20,000 or more | Specified repayment restrictions. This is separate from depositing cash that you already hold. |
These threshold descriptions are from the Department’s “Prohibited transaction in cash/limit on cash transactions” overview, reflecting the Finance Act, 2026. The actual application—including aggregation, exceptions and consequences—depends on the complete current Act, Rules and notifications, and on the facts. The Department’s overview directs readers to those legal materials for authoritative provisions.
When a bank may report cash deposits under SFT
The Department’s SFT Filing Guide, accessed in 2026, identifies cash deposits aggregating to ₹10 lakh or more during a financial year in accounts other than current accounts and time-deposit accounts as reportable by banks or co-operative banks. This is a reporting threshold, not an automatic notice trigger or a finding that the deposit is taxable.
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Account type matters. The guide treats cash deposits and withdrawals in current accounts separately from the threshold described for other accounts. Check the current Rule and its table for the applicable current-account amount; the Department’s guide summary does not state that amount. Do not apply the ₹10 lakh figure to current accounts or time deposits.
A report gives the Department information that may be considered alongside other records. It does not, on its own, establish where the money came from, whether it is taxable, whether a transaction broke a cash restriction, or whether an inquiry will follow. The relevant question for a taxpayer is whether they can explain the source and purpose of the funds with records that fit their circumstances.
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Cash withdrawals have a separate TDS rule
Section 194N concerns TDS on cash withdrawals; it is not a limit on cash deposits. The Department’s section 194N FAQ, accessed in 2026, describes cumulative withdrawal thresholds of ₹20 lakh and ₹1 crore, with the applicable threshold and rate depending on the recipient’s return-filing history. Exceptions and the precise rate depend on the applicable rule and the person’s circumstances, so check the current FAQ and statutory provisions before relying on a particular figure.
A withdrawal subject to TDS is not automatically a notice, and TDS does not by itself settle the tax treatment of the money. This rule should not be confused with SFT reporting of deposits or the restrictions on specified receipts and repayments.
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What to keep if you need to explain a deposit
There is no single document that proves the source of every cash deposit. Keep records that match the actual source and purpose, and make sure the dates and amounts reconcile with the deposit and any related transaction. Depending on the facts, useful records may include:
- Bank statements, deposit slips and a contemporaneous cash record.
- Invoices, receipts or business books for cash generated from business activity.
- Sale documents or other records showing proceeds from an asset or transaction.
- Documents supporting a gift, inheritance, loan or repayment, where applicable.
- Records showing a cash withdrawal from another account if that is the source.
These examples are not a checklist of legal requirements for every taxpayer. Explain the actual source accurately; do not label a deposit as a gift, loan or business receipt unless that description is supported by the facts and records.
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How to check whether an actual notice is genuine
The Income Tax Department offers a pre-login service called “Authenticate Notice / Order issued by ITD,” available to registered and unregistered users. The Department’s manual describes verification either with PAN, document type, assessment year, date of issue and mobile number, or with the Document Identification Number (DIN) and mobile number, followed by an OTP.
- Open the Department’s e-Filing portal and choose the pre-login “Authenticate Notice / Order issued by ITD” service.
- Select the verification method available to you: document details or DIN.
- Enter the requested particulars and mobile number, then complete OTP verification.
- After authentication, read the communication itself. Identify the proceeding type, the exact information or records requested, and the response deadline.
- Respond through the channel and by the date specified in the verified communication. Keep a copy of your response and supporting documents.
Do not decide how to respond based only on an alarming subject line, a message preview or a claim that a particular deposit amount always leads to a notice. If the verified communication is unclear or the records are complicated, a tax professional can help interpret the request and prepare a fact-specific response.
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