As per the Income-Tax Act (ITA), 1961, there is no restriction on the amount of money stored in the house; in case of an income tax raid, an individual is required to present the source of the money.
This is especially true for the money should not be unaccounted for in income. In case an individual’s documents do not match the amount of money stored in the house, then income tax officials can penalise the individual. In such cases, income tax personnel are authorised to seize the unaccounted money, and the fine can be as high as up to 137% of the total money.
It is important to take into account the following rules related to cash mandated by the income-tax department:
No person can accept in cash Rs 20,000 or more for loans or deposits: The income-tax department strictly prohibits any individual from accepting an amount of Rs 20,000 or more in cash related to loans or deposits.
Permanent Account Number (PAN) is mandatory for transactions of over Rs 50,000: As per the Central Board of Direct Taxes (CBDT), individuals must provide a PAN card for deposits or withdrawals of over Rs 50,000 at a time.
Scrutiny by investigating agency of cash-based asset transactions of over Rs 30 lakh: Indian citizens engaging in the purchase or sale of assets through cash of more than Rs 30 lakh may come under the lens of investigating agencies.
Investigation into credit-debit card transactions of more than Rs 1 lakh: Any payment transaction exceeding Rs 1 lakh paid through credit or debit cards at a time is likely to draw the attention of investigating agencies.
A 2% Tax Deducted at Source (TDS) is levied on withdrawals exceeding Rs 1 crore: Individuals withdrawing more than Rs 1 crore in cash from the bank in a financial year are subject to shell out a 2% TDS.
Penalty for cash transactions of more than Rs 20 lakh: Cash transactions exceeding Rs 20 lakh in a year are likely to attract penalties, while the purchase and sale of cash property of more than Rs 30 lakh can draw the attention of investigative agencies.
Caps on cash payments: Limits include not paying over Rs 2 lakh in cash for purchases without PAN and Aadhaar information and restrictions on transactions more than Rs 1 lakh with credit-debit cards.
Family transactions and loans: Receiving over Rs 2 lakh in cash from a relative in a day or taking a loan of more than Rs 20,000 in cash from any individual else is prohibited.
An individual is required to be abreast of these rules to avoid any legal repercussions and ensure total compliance with the income tax rules and regulations.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.