Income Tax Alert: Know the Legal Cash Holding Limit & Tax Rules in India to Avoid 78% Penalty

Nowadays most corruption happens in cash transactions. This is the reason why Modi government is making every effort to promote digital transactions along with fixing the limit of cash transactions. From depositing cash in the bank to purchasing land and mutual transactions, the limit of cash has been fixed. Every citizen needs to know this so that any kind of legal trouble can be avoided.

Know how much you can keep safely

Under the Income Tax Act, there is also a rule about keeping cash at home! In such a situation, every person needs to know what is the limit of keeping cash with him. If this rule is not followed, the Income Tax Department officials can not only confiscate your money but can also impose a penalty and interest. Therefore, everyone person must know what is the maximum limit of keeping cash at their home under the Income Tax Act. It is wise to understand these rules to keep your hard-earned money safe.

What is the limit for keeping cash

According to the Income Tax law, you can keep any amount of money in your house. There is no legal restriction on this. You can keep any amount of cash in your house, but its source must be valid. Also, it would be better if you include the cash amount in the Income Tax Return (ITR) so that if there is any inquiry about its source, you can give a clear answer. It is always safe to keep a transparent account of your income.

Penalty can be up to 78%

Sections 68 to 69B of Income Tax tell about the properties and income that cannot be disclosed. If any money is found with you and you are unable to give correct information about its source, then it can be considered as undeclared income. In such cases, the tax officer can impose heavy taxes and penalties on the person concerned. This amount of fine can be up to 78 percent of the total undeclared income. For example, if you have an undeclared income of ₹ 1 crore, then a fine of up to ₹ 78 lakh can be imposed on it. Therefore, always keep your source of income valid.

What kind of caution is necessary

If you do business, then your cashbook and account book should match. There should be official documents related to its earning and savings in relation to any amount kept in your house. In this sense, keeping cash at home in India is not a crime in the eyes of the law, but accountability is necessary for it. If you have earned this amount honestly, then there is nothing to worry about and your accountability is the biggest security. Always keep your financial transactions clear and transparent.