New Income Tax Bill 2025 Approved: Key Changes and Cash Deposit Limits
Income Tax Bill 2025 Approved
Income Tax Bill, 2025: On Tuesday, August 12, Parliament approved the Income Tax Bill, 2025, which will replace the existing Income Tax Act of 1961.
Once it receives the President's signature, it will become law. This new legislation will introduce several changes to the rules governing financial transactions. Under the Income Tax Bill 2025, there will be limits on cash deposits in savings and current accounts, referred to as CASA.
This limit specifies the maximum amount an individual can deposit in their account at any given time. The regulation aims to monitor cash transactions to prevent money laundering, tax evasion, and other illegal activities. However, this new rule will come into effect in April 2026, meaning it will apply from the financial year 2026-27.
Cash Deposit Limits in Accounts
Limits for Savings and Current Accounts
According to Taxconcept, the new Income Tax Bill allows account holders to maintain up to ₹10 lakh in savings accounts and ₹50 lakh in current accounts. Any deposits exceeding these amounts must be reported to the Income Tax Department.
Important Regulations to Note
Section 194N
- This regulation applies to cash withdrawals.
- A 2% TDS (Tax Deduction at Source) is deducted on withdrawals exceeding ₹1 crore in a financial year.
- If an individual has not filed income tax returns (ITR) for the past three years, a 2% TDS applies on withdrawals over ₹20 lakh and 5% on amounts exceeding ₹1 crore.
Section 269ST
- This rule pertains to cash receipts.
- A penalty may be imposed for receiving ₹2 lakh or more in cash in a single transaction or within a year.
- This regulation does not apply to bank withdrawals, although TDS may apply to amounts exceeding the withdrawal limit.
Sections 269SS and 269T
- These rules relate to cash loans.
- A penalty may be imposed for taking or repaying cash loans exceeding ₹20,000 in a year.
- The penalty amount can equal the loan amount.
Features of the New Bill
What Makes the New Bill Unique?
The drafting process involved approximately 75,000 person-hours, incorporating feedback from experts, tax officials, chartered accountants, and other stakeholders to ensure the law is practical and modern. The new legislation is designed to meet the needs of the digital age, focusing on making processes easier, more transparent, and faster for taxpayers.