According to tax and investment experts, under Section 269ST of the Income Tax Act, home loan borrowers face strict cash transaction limits. As reported by Mint, borrowers can deposit less than ₹50,000 in a single transaction without furnishing their PAN, but for amounts of ₹50,000 or more, banks require PAN documentation. Most critically, no one can receive ₹2 lakh or more in cash from a single person in a single day without facing 100% penalty liability. This means banks will not accept more than ₹2 lakh in a single day into either savings accounts or home loan accounts.
Manikaran Singhal, a SEBI-registered tax and investment expert, explains that the maximum threshold for cash deposits applies across all bank accounts and home loan accounts. As reported by Mint, the net sum of cash deposited in one's bank accounts and home loan account should not exceed ₹10 lakh in one financial year. Breaking this ₹10 lakh threshold triggers Statement of Financial Transactions (SFT) reporting by banks to the income tax department, potentially leading to an income tax notice from the I-T department.
Financial experts strongly advise against direct cash deposits into home loan accounts. According to Mint reports, Kartik Jhaveri, Director at Transcand Capital, recommends depositing cash in savings accounts first and then transferring it online to the home loan account. This approach helps borrowers maintain their source of income in one place, making ITR filing easier at the end of the financial year. The experts emphasize that using savings accounts for cash deposits before transferring to home loan accounts is the recommended practice to avoid potential income tax complications.
The strict cash transaction rules reflect the Income Tax Department's and various investment platforms' efforts to discourage cash transactions in recent years. As reported by Mint, these institutions have been tightening rules for the public to prevent cash transaction violations. The regulations apply uniformly across all bank accounts and home loan accounts, with banks implementing these limits to ensure compliance with income tax regulations and prevent potential penalties for violations.
