Even in today’s digital era, many people like to keep cash at home. The Income Tax Department has not fixed any specific limit on how much cash you can store. However, it is important to prove the legitimate source of this cash.
If you fail to show valid proof, you may face heavy fines and even legal action. Different sections of the Income Tax Act stress the need for transparency in receiving and using cash to prevent black money and tax evasion.
Key Rules Under the Income Tax Act
Sections 68, 69, 69B: Whenever you hold cash, you must be able to explain its source.
If during an inquiry you cannot prove the cash as genuine, it will be treated as undisclosed income and attract a penalty.
Sections 269SS, 269ST, and 269T: These restrict large cash transactions related to loans, deposits, or payments. Any cash transaction above ₹20,000 is illegal and will lead to penalties.
What You Should Keep in Mind
Violating these rules can result in hefty fines and legal action, depending on your income.
While digital payments are becoming more common, those who keep cash at home must maintain proper records to prove its validity.
To avoid problems later, always ensure transparency in cash handling.
The government is strict against tax evasion and black money, so compliance with these rules is the safest option.
