What is Threshold Limit in Banking? and 6 Amazing Rules for SB a/c

What is threshold limit in banking?

In this article, we can understand what is threshold limit in banking? Today technology is very advanced. New technology is being developed for the convenience of the customer and the customer is also making full use of the technology.

In the past, the work of banks was completely manual, so there was a lot of crowd in the banks. As a result, the number of transactions has increased significantly.

Customers are sitting at home and make payments of the light bill, water bill, DTH recharge, etc. In such a scenario, the question arose for the banks that how much can a person transact in a particular period?

The answer to this question is the threshold limit. Then what is threshold limit in banking? Banks have set a limit for each person to transact. The threshold limit is the limit of how many transactions a person can make in one financial year.

What is Threshold Limit in Banking

What is threshold limit in banking for saving accounts –

What is threshold limit in banking? Savings account holders have a common question about how many transactions can be done in this account. When you go to open a savings account in a bank, documents like Aadhar card, pan card are taken from the account holder. Therefore, the bank knows the account holder completely, so the customer needs to know how much to deposit in the savings account or what are the limitations of the savings account.

What is threshold limit in banking? And what is the maximum limit for a saving account?

After learning What is threshold limit in banking? We can understand the maximum amount to be deposited in a savings account is given in Section 285 (b) of the Income Tax Act.

1. If the cash deposit in your savings account is above 10 lakhs, you get a notice from the income tax department.
2. This 10 lakh amount is calculated in a full financial year i.e. from 1st April to 31st March whether it is deposited in a small amount or large amount.
3. If you have four or five accounts in a single bank, then the amount in all those accounts is calculated.
4. Even if you have accounts in different branches of the same bank, the total amount in all those accounts is calculated.
5. The amount of Rs.10 lakhs is calculated according to the bank.
6. The amount of Rs.10 lakhs should be in the form of cash.
7. If you have over Rs10 lakh in your account, you will get a notice from the income tax department.
8. If there is an amount of Rs.10 lakh in your account you have to explain it to the income tax department.
9. You have to know the answers to these questions- Where did this amount come from? What is the source of that amount?
10. If you get a notice from the income tax department and you have the answers to their questions, you do not need to worry.
11. If you do not have an explanation for this amount, it is considered as unexplained cash credit from the income tax department.
12. And such unexplained cash credit is taxed at 60% by the income tax department.
13. 60% tax + 25% surcharge + 4% education cess Thus 79% heavy tax has to be paid by the customer.
14. In some cases money is deposited in your savings account by relatives or friends.
15. Therefore, you should not take money from others and do not deposit it in your account.

Banking rules for saving bank account

1. A savings account is opened by a salaried, employed, or another regular earner for saving. The savings account cannot be used as a current account for any reason. Since the purpose of the savings account is to save, the bank imposes restrictions on withdrawals to this account. Apart from this, a threshold limit is also imposed on the savings account by the bank. Therefore, it is complicated for the customer to deposit a large amount.
2. To use the savings account as a current account, the bank advises the concerned customer to close the savings account and open a current account.
3. If you want to open an account for business or trade, you have to open a current account.
4. Overdraft facility is given by the bank on the current account.
5. Overdraft facility means that if the customer has given a cheque and there is no balance in the account then the account holder can pass the cheque through the bank using the overdraft facility.
6. E.g. If the account holder withdraws a cheque for Rs.20,000 and there is a balance of Rs.15000. Customers can pass that cheque by using an overdraft facility.

See Also – What is ECS in banking & 8 best benefits of (Electronic Clearing Services (ECS)

When is the threshold limit reset?

What is threshold limit in banking-The calculation of every work or everything of the bank is based on the financial year. The financial year is from 1st April to 31st March. The calculation of the threshold limit of the customer’s account is similar to the financial year.

If in a financial year the limit of cash deposit exceeds the threshold limit, the account holder gets notice from the income tax department. If the account holder understands how or when the threshold limit of the account is set then many of his problems can be reduced.

The threshold limit of the account is automatically updated at the end of each financial year and the commencement of the new financial year. So the account holder can deposit cash in the new financial year.

However, if the account holder wants to increase the threshold limit within the end of the financial year, the account holder will have to submit the following documents to the bank. This includes the account holder’s ID proof, ITR, turnover proof and application letter, etc.

See Also – What is Green Banking and 7 best products of green bank.

Letter format to increase threshold limit  –

To,

The Bank Manager,

………….. (Name of the bank)

…………… (Address of the bank)

Sub- Regarding raising the threshold limit of the account.

Sir / Madam,

I have been your bank account holder for the last….. Years. My account number is…………. In this financial year, the limit of cash deposit transactions on my account exceed up to 80% of the threshold limit because of…………………………… (Reasons for Increasing Threshold Limit). Please increase the threshold limit of my account.

Thanking you,

Sincerely,

…………… (Sign)

Date-

Place-

What is threshold limit in banking?

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