Cash Transaction Rules: How much cash can be withdrawn from the bank in one day, know what the income tax rules say.

Cash Transaction Rules: Most people are unaware of the legal limit for cash transactions in a day. Let’s explore this limit.

Cash Transaction Rules: In the era of promoting digital payments and online banking, the Income Tax Department has become increasingly strict regarding large cash transactions. Whether you’re withdrawing cash for personal use or business purposes, it’s crucial to understand the legal limit for daily cash transactions. Many people may not realize that exceeding the prescribed limit will not only result in a penalty but also result in an income tax notice. So, let’s explore the permissible daily cash transactions under the Income Tax Act.

Section 269 ST

Section 269 ST of the Income Tax Act prohibits any individual from receiving cash of more than Rs 2 lakh (200,000) in a single day from one or more individuals. This restriction applies regardless of whether the transaction is personal or business. For example, if you sell a car and receive Rs 2.5 lakh (250,000) in cash, it is legally against the Income Tax Act.

Penalties for Violating the Rule

If you accept cash exceeding ₹2 lakh, the Income Tax Department can impose a penalty equal to the total amount of cash received. For example, if you accept ₹5 lakh in cash for property or business transactions, the penalty can be up to the full ₹5 lakh. This penalty is imposed under Section 271DA, and the recipient of the cash is held accountable.

Why is this rule in place?

The ₹2 lakh cash transaction limit was imposed to curb black money and tax evasion in the economy. The government’s goal is to ensure that all large transactions, whether through bank transfers, checks, or digital means, are transparent and traceable. Even if it’s a personal transaction, such as giving money to a friend or relative, if it exceeds ₹2 lakh, it can be investigated.

Income Tax Department’s Monitoring System

The Income Tax Department uses AI-powered data analysis to monitor unusual or high-value cash deposits and withdrawals. Alerts can be issued for cash deposits or withdrawals exceeding ₹10 lakh in a savings account or ₹50 lakh in a current account in a financial year. Furthermore, multiple cash transactions of less than ₹2 lakh can also be flagged as suspicious to avoid detection.

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The post Cash Transaction Rules: How much cash can be withdrawn from the bank in one day, know what the income tax rules say. first appeared on informalnewz.

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