Navigating Cash Regulations Under the Income-Tax Act (ITA), 1961 As per the Income-Tax Act (ITA), 1961, there is no restriction on the amount of money that can be kept in a house. However, in the event of an income tax raid, individuals must be able to explain the source of the money. It is crucial that the money is legitimate and is accounted for in the individual’s income. Failure to match documented income with the amount of money found at home can lead to penalties of up to 137% of the total amount, and the unaccounted money may be seized by income tax officials.
The income-tax department has established several important regulations pertaining to cash transactions:
- Cash transactions of Rs 20,000 or more for loans or deposits are prohibited.
- A Permanent Account Number (PAN) is mandatory for transactions exceeding Rs 50,000.
- Transactions involving more than Rs 30 lakh in cash-based asset purchases or sales may be scrutinized by investigating agencies.
- Credit or debit card transactions exceeding Rs 1 lakh are subject to investigation by authorities.
- A 2% Tax Deducted at Source (TDS) is imposed on cash withdrawals exceeding Rs 1 crore in a financial year.
- Cash transactions exceeding Rs 20 lakh may result in penalties, and cash property transactions over Rs 30 lakh can attract attention from investigative agencies.
- Restrictions are in place for cash payments, including a limit of Rs 2 lakh for purchases without PAN and Aadhaar information, and restrictions on transactions over Rs 1 lakh using credit or debit cards.
- Receiving more than Rs 2 lakh in cash from a relative in a day or taking a loan of over Rs 20,000 in cash from any individual is prohibited.
It is essential for individuals to be knowledgeable about these regulations to avoid legal consequences and ensure compliance with income tax rules and regulations.