• Cash deposit of about 5.5 lakhs in my savings account

Hi Team,

I have a citibank suvidha account with a balance of approx 2.5 to 3.0 lakhs INR. I am in the process of applying for Canada PR for which I would need to show balance of about 10 lakhs. I want to deposit about 5.5 lakhs cash in my account which I am getting from my cousin brother.

Should me and my cousin be worried about making this deposit? Should we be expecting any scrutiny and any document which we need to keep it ready? Please help/
Asked 1 year ago in Audit from Chennai, Tamil Nadu
It is not advisable to deposit such a big amount as cash. Because, IT department are sending letters for good cash deposit 
Vidya Jain
CA, Kolkata
554 Answers
12 Consultations

4.8 on 5.0

Dear Sir

Since it is a cash deposit, only you are responsible for the same. You should be in position to explain the source for the same.

Since there is a system of Annual Information Return being filed by banks, your cash deposit exceeding Rs. 10 Lakhs in a Savings account / exceeding Rs. 50000/- per transaction will be reported to Income tax department through AIR . You will be most likely receiving a notice, if you are depositing cash.

Moreover, if you inform to tax authorities that you have received the same as a loan from your cousin, both of you will be in trouble since cash loans in excess of Rs. 2 lakhs is not allowed as per Section 269ST of the Income tax, which will land you in a penaly of Rs. 10 Lakhs.

Hence in my view, to be out of all the problems, it is suggested to receive the said amount either by way of Crossed Cheque/DD or NEFT/online transfer from your cousin and deposit the same to your bank account.

B S Sridhar
CA, Chennai
43 Answers
17 Consultations

5.0 on 5.0

Hi,

No need to worry if your Cousin can explain the source of the Amount. However, you cannot take cash in excess of Rs. 2 Lakh from a single person.

If your cousin has proper source of money, then ask him to directly transfer the amount to your Bank Account from his Bank Account
Pradeep Bhat
CA, Bengaluru
450 Answers
28 Consultations

5.0 on 5.0

Hello Sir,

Why are you depositing the funds in Cash, Can't your cousin issue you a cheque instead. ?

Trust this clarifies your query. 

Feel free to call / get back in case of further clarifications. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
2104 Answers
91 Consultations

5.0 on 5.0

Dear Sir,

First of all, you cannot accept cash amount in excess of 2 lacs from anyone. It will trigger 100% penalty.

Further, even if you accept cash amount below 2 lacs, your brother needs to show the sources of fund. 

You can alternatively take the amount via cheque.
Please feel free to call/ revert in case of any doubts

Thanks and Regards
Abhishek Dugar
CA CS B.Com
Abhishek Dugar
CA, Mumbai
2929 Answers
123 Consultations

5.0 on 5.0

Also, we need to check whether he is your relative as per section 56 or not. Please let us know the exact relation.

Please feel free to call/ revert in case of any doubts

Thanks and Regards
Abhishek Dugar
CA CS B.Com
Abhishek Dugar
CA, Mumbai
2929 Answers
123 Consultations

5.0 on 5.0

Under the newly introduced Section 269ST of the Income Tax Act w.e.f 1st April 2017, no person shall receive an amount of Rs 2 Lakhs or more in cash. If you are depositing cash of Rs 2 Lakhs or more in your bank account, you should be able to have adequate documents to prove that the money was received from different persons. 
The penalty for receiving cash of Rs 2 Lakhs or more is the equivalent amount. Hence, you need to be very careful in making cash deposits into your bank account.

If you are borrowing from your friends and /or relatives, make sure that you borrow them through banking channels only and not in cash, if the amount is > Rs 20K. 

So to serve your purpose, do not make cash deposits but get the amounts through cheques/NEFT etc.  
B Vijaya Kumar
CA, Hyderabad
845 Answers
48 Consultations

5.0 on 5.0

Hello Sir,

I would suggest you to rather go for a Cheque entry than a Cash Entry.

Regards
Keerthiga Padmanabhan
M.Com., CA, LLB
Keerthiga Padmanabhan
CA, Greater Mumbai
784 Answers
23 Consultations

5.0 on 5.0

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