Cash Transactions Limit: Penalty will be imposed for cash transactions exceeding this limit in one day.
The Income Tax Department strictly monitors cash transactions. If you transact more than ₹2 lakh in cash in a single day, you could face a hefty fine. Under Section 269ST, the tax department can recover the entire amount as a penalty in such cases. Learn the full details.
Cash Transactions Limit: In today’s times, when the use of digital payments is rapidly increasing, both the government and the Income Tax Department are closely monitoring cash transactions. This is aimed at preventing black money and tax evasion.
Sometimes, people transfer large sums of money in cash without knowing it, which could violate the Income Tax Law. Therefore, it is important to understand the rules regarding cash limits thoroughly to avoid future penalties or notices.
Cash transactions are limited to only ₹2 lakh per day.
According to Section 269ST of the Income Tax Act, a person can only transact cash up to ₹2 lakh in a day. This means that receiving more than ₹2 lakh in cash from a single person in a single day would be a violation of the rules. This rule applies to cash received in any form—whether it’s a gift, loan, business payment, or any other transaction.
For example, if you give or receive ₹3 lakh in cash from someone, the Income Tax Department can seize it. You may then receive a notice from the Income Tax Department, asking you to explain the amount.
The Income Tax Department also monitors these transactions.
The Tax Department monitors several types of cash transactions, including:
Bank Deposit: If you deposited more than ₹10 lakh in cash in a year.
Credit Card Bill Payment: Paid a credit card bill with more than ₹1 lakh in cash.
Property Deal: Bought or sold property worth ₹30 lakh or more.
Gift: Received a gift in cash of more than ₹50,000.
Business Payment: Received more than ₹2 lakh in cash from a client.
Heavy fines for violating the rules
If a person violates Section 269ST, they may be fined the same amount as the cash they received. For example, if you received ₹2.5 lakh in cash, the fine will also be ₹2.5 lakh.
This rule applies to all individuals, whether salaried, a businessman, or a professional. Tax experts say that even simple cash transactions can come under the tax department’s scrutiny if they exceed the limit.
How to Avoid an Income Tax Notice?
If you want to avoid an Income Tax Notice, be sure to follow the rules below:
- Make all large transactions online or through banking channels.
- Keep a record of every payment, whether it’s a bill or receipt.
- In the case of a gift or loan, keep the transaction in writing.
- If cash must be given for some reason, keep the limit in mind.
Different Rules for Banks and Businesses
Businesses must also be careful with their accounting. If a trader accepts more than ₹2 lakh in cash from a customer, they are violating tax rules. Banks and NBFCs are also mandated to report all large cash transactions.
Why are digital transactions important?
The government is steadily moving towards Digital India and a cashless economy. This prevents tax evasion and makes it easier to monitor black money. Transactions are tracked, and this also makes it easier to file tax returns in the future.
Conclusion
Be cautious if you make large cash transactions. The Income Tax Department now tracks every large cash transaction. Try to make all large payments through bank transfer or UPI. This will not only keep your money safe but also avoid any notices or penalties.
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The post Cash Transactions Limit: Penalty will be imposed for cash transactions exceeding this limit in one day. first appeared on informalnewz.
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