Savings accounts no longer safe: CA says I-T dept tracks cash deposits over ₹10 lakh, withdrawals above ₹1 crore

CA Ruchita Vaghani on Tuesday said in a post on X (formerly Twitter) that your savings account is always under the scanner of the Income Tax Department, and it is not just a place to park your money. She explained that cash deposits over ₹10 lakh in a financial year are reported to the Income Tax Department under the Statement of Financial Transactions (SFT).

Vaghani also mentioned that banks report cash withdrawals over ₹1 crore in a financial year. "Banks report cash withdrawals over ₹1 crore in a financial year (₹20 lakh if no PAN/Aadhaar). Frequent large withdrawals can trigger verification," she wrote. 

She further highlighted that frequent large cash withdrawals, interest mismatches, and undisclosed accounts can also draw scrutiny, urging taxpayers to remain cautious, track all transactions through their Annual Information Statement (AIS), and ensure accurate reporting while filing their income tax returns.

In case of an interest credit mismatch, Vaghani said that it may lead to a notice or demand during the processing of your income tax return. She said that the interest reflected in your bank statement should match the amount reported in Form 26AS/AIS. 

For multiple accounts, she advised: "Having multiple accounts is fine, but you must disclose all savings interest income in ITR — not just from your main account."

Income from joint accounts should be reported by the person who actually owns the funds and not necessarily both account holders. Furthermore, CA Vaghani said that even if an account is inactive, any interest credited is still taxable and should be included in your return. 

So, what should taxpayers do? "Track all your savings accounts in your Annual Information Statement (AIS) before filing ITR to ensure no mismatch. Your bank transactions are transparent to the Income Tax Department. Always report savings interest correctly. Avoid unexplained high-value cash deposits. Stay compliant, stay stress-free," she wrote towards the end of her post.