Cash flow: Is there any excess cash getting deposited in your savings account? If you do not take care of this, you may get into a big problem. The day more than 10 lakh cash gets deposited in your savings account in a year, you will get into legal trouble. You will get a notice from the Income Tax Department. Then a series of questions will start on your every answer. Proofs will be sought in support of your every answer. 

If evidence is not found, legal action will be taken

If you get stuck or confused in answering or fail to provide any proof, the law will tighten its grip against you. Your bank accounts can be frozen and you can also end up in jail. Therefore, you should keep proof every time cash is deposited in your account. Those proofs must contain the answers as to who has deposited cash in your account? Why did he deposit cash in your account? Has he deposited this amount as part of any business or service provided by you? Or has he repaid any loan taken from you? Has he given donation for a function in your personal account or is that amount as a gift? Along with the proofs searching for answers to all these questions, you will also have to provide proof that whatever cash has been deposited in your account, you have shown it or are going to show it in your income tax return. If this is not the case, then you will also have to prove that the amount deposited in your account is not taxable income at all.

You will be in trouble even if you deposit more than Rs 2 lakh cash at one time

It is not that after a year of cash deposits in your account, when the limit exceeds Rs 10 lakh, the Income Tax Department will question you. Rather, if more than Rs 2 lakh is deposited in your account by a single person in a single day, then also you may have to face embarrassment. For this also, you will have to answer the same questions as you have to answer when more than Rs 10 lakh is deposited in total in a year. The same kind of notice will also be served to you by the Income Tax Department.