Tuesday, April 16, 2024

Banking

Here’s all you need to know about the current account tax limit in India

RazorpayX current account

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We know that in India, businesses mostly have a current account for their banking needs. A current account provides benefits and lucrative deals which are well-suited for the companies. With a current account, a company can enjoy customized and tailor-made services. It is therefore designed to suit businesses as opposed to savings accounts.

While you are carrying out any significant monetary transactions, tax is one such component that you always have to take care of. Many business decisions are made on the basis of tax limits and whether it will be beneficial or not. Incorrect way of addressing tax needs may make you end up losing your money.

For many business owners, taxes can be confusing and cumbersome. But all your confusions can be avoided by simply being aware and informed about taxation rules and regulations of the country.

Following are a few pointers that you need to know about the tax implications in India for a current account:

  • You must be aware of your current account cash deposit limit. If this cash deposit limit is violated, then you stand a chance of receiving notice from the Income Tax Department. In India, the limit for cash deposits in a current account in Rs. 50 lakhs.
  • In India, your income is taxable and paid majorly under two defined buckets- direct taxes and indirect taxes. Direct taxes are collected by the Government of India itself, while indirect taxes are collected by a third party from you on behalf of the Government. The most common example of a direct tax is Income Tax. Indirect taxes include taxes like the GST. The following are a few income types that are liable to taxation:
    • Rental income obtained by renting out properties
    • Capital gains tax through the sale of any capital asset such as shares, residential or commercial property, mutual funds, etc. Even so, this capital gains tax is applicable only if the interest earned is above a certain limit
    • Salary of employees, etc.
    • Taxes are also levied based on which category of income slab you fal under, as defined by the government rules

This list is not exhaustive, and there may be other such incomes that attract taxation.

  • There are also many facilities where you can enjoy zero tax charges. For example, there are no tax implications on fund transactions of higher amount using your current account, as per government rules
  • There may be certain taxes involved if your account is a non-resident ordinary current account
  • Make sure you check and are up-to-date with your bank’s tax limits and are also aware of the government rules and policies that are in place for taxation
  • You may also avail professional services for your tax needs if your company is currently in a growth phase and may want services of good quality. Do not pay attention only when it is time to file your income tax returns
  • If you have income coming from other sources, then this makes your money taxable. Make sure you disclose these other income sources while filing your returns

Stay updated with all tax requirements and make sure documentation of the same is in place. It is advisable to get in touch with your bank or relationship manager in order to know more about the tax limits that are applicable for your current bank account.

Disclaimer: The above article is subjective and generic in nature. Tax implications and taxes associated with various banking facilities may differ from bank to bank. Refer to government policies related to tax rules and regulations

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