Withdraw ₹10L Cash? Your IT Dept Gets Notified

Banks must report cash withdrawals above ₹10 lakh in a year to the income tax department. This doesn't mean you're in trouble — but if your income doesn't match, expect a notice.

Here's what happened: Under Rule 114E, banks are legally required to report aggregate cash withdrawals exceeding ₹10 lakh in a financial year to the Income Tax Department.. This reporting goes into your Annual Information Statement (AIS), which the IT department uses to cross-check your declared income against actual financial activity.. Large withdrawals alone don't attract tax — but unexplained cash movements that don't match your ITR income can trigger scrutiny or a Section 148 notice..

What you should do: Check your AIS on the Income Tax portal (incometax.gov.in) to see exactly what your bank has already reported about your transactions.. If you regularly withdraw large cash amounts for business or personal reasons, maintain a written record — bills, invoices, or a simple cash register — to explain the source.. Avoid splitting large withdrawals into multiple smaller amounts across days to 'stay under the limit' — this is flagged as structuring and can attract serious scrutiny under PMLA..

Your AIS also captures FD interest, mutual fund redemptions, and property transactions. Review it before filing your ITR every year — mismatches are the #1 reason people get IT notices.