Is Your Savings Account on the Income Tax Radar? 7 Mistakes You Must Avoid

💰 Is Your Savings Account on the Income Tax Radar? 7 Mistakes You Must Avoid

Your savings account might look simple — a place to store your income safely. But with technology-driven monitoring, the Income Tax Department keeps a close eye on unusual bank activity. Even genuine taxpayers can get flagged if they ignore certain limits and reporting rules.

Let’s uncover the 7 key savings account mistakes that can land you on the Income Tax radar — and how to stay compliant.

🧾 Avoid unwanted tax notices – learn, plan, and file with Professional Duniya.

1️⃣ Frequent Large Cash Deposits

If you deposit ₹10 lakh or more in cash during a financial year (across all accounts), banks must report it to the Income Tax Department.

✅ What to do:

• Keep receipts or proof of income for every large deposit.

• Avoid splitting large cash into multiple small deposits.

2️⃣ Depositing ₹2 Lakh or More During Sensitive Periods

During times of special surveillance (like demonetisation or election periods), cash deposits above ₹2 lakh can be scrutinized.

💡 Tip: If depositing old cash, ensure it’s from known sources like past savings, business receipts, or withdrawals.

3️⃣ Not Reporting Fixed Deposit Interest

Your FD interest might be small, but banks already report it to the tax department through Form 26AS or AIS.

⚠️ Mistake: Forgetting to include FD interest in your ITR.
✅ Fix:

• Declare it under “Income from Other Sources.”

• Claim TDS credit if already deducted by the bank.

4️⃣ Frequent Transfers Between Multiple Accounts

Regular transfers between your own or family members’ accounts can look suspicious — especially if they don’t match your declared income pattern.

✅ What to do:
Use proper descriptions like “transfer to wife for household expenses” or “personal transfer.” Keep transactions simple and traceable.

5️⃣ Large Cash Withdrawals (₹1 Crore or More per Year)

Withdrawing ₹1 crore or more in cash per financial year from banks triggers mandatory reporting under Section 194N.

✅ Tip: Use digital or cheque-based payments wherever possible to avoid extra scrutiny and TDS deductions.

6️⃣ Not Quoting PAN in High-Value Transactions

PAN is mandatory for deposits, investments, or purchases over ₹50,000. Skipping it can trigger a red flag in the system.

✅ Fix: Ensure your PAN is linked to your bank account and always quote it for big transactions.

7️⃣ Forgetting to Report Savings Account Interest

Interest from your savings account is taxable under “Income from Other Sources.”
You can claim a deduction of up to ₹10,000 under Section 80TTA, but it must be reported first.

✅ Tip: Always check your AIS (Annual Information Statement) before filing your ITR — it shows all your bank interest automatically.

🧾 Final Words by Professional Duniya

Your savings account may not hide anything from the Income Tax Department — every transaction is traceable today.
Stay transparent, maintain proper documentation, and declare all income honestly in your return.
💡 A little awareness today can save you from tax notices tomorrow

✨ Stay tax-smart with Professional Duniya – your guide to stress-free compliance.