In India, the tradition of stashing cash at home is still prevalent among many families.
However, with the Income Tax Department’s watchful eye, it’s crucial to be aware of the regulations governing the amount of cash one can keep at home without inviting tax-related troubles.
No Restriction, But Accountability Matters
While the Income Tax Act doesn’t impose limits on keeping cash at home, individuals must be prepared to disclose the source of the cash in case of an Income Tax Department raid.
Maintaining transparency with income levels is key to avoiding penalties and potential confiscation of money.
Limits Set by the Income Tax Department
According to the Income Tax Department, certain thresholds and guidelines exist for managing cash transactions:
1) Restriction on Loan or Deposit: Transactions involving Rs 20,000 or more in cash for loans or deposits are prohibited.
2) Cash Transactions Over Rs 20 Lakh
Transactions exceeding Rs 20 lakh in a financial year may attract fines if the source and account details are not known.
3) PAN for Transactions Above Rs 50,000
PAN number and details are mandatory for deposits or withdrawals exceeding Rs 50,000 at a time.
4) PAN and Aadhaar for Cash Deposits
Account holders depositing over Rs 20 lakh in cash within a year must provide PAN and Aadhaar information.
5) Property Transactions Over Rs 30 Lakh
Cash transactions over Rs 30 lakh in property sales or purchases may subject any Indian citizen to scrutiny.
6) Credit-Debit Card Payments
Payments exceeding Rs 1 lakh through credit or debit cards may trigger investigations.
7) Restrictions on Cash from Relatives
Accepting cash amounts of approximately Rs 2 lakh or more from seven relatives in a day is prohibited; such payments should be conducted through banks.
