Cash Transactions: Penalties for Excessive Transactions

 Cash Transactions are payments or transfers of amount that can be made using physical cash during a single transaction or over a specific period.

There is no limit on cash deposits. However, high-value transactions are reported under the Statement of Financial Transactions (SFT) provisions.


Cash Transaction Limits

Cash Deposits and Withdrawals

Savings or Joint Accounts: If cash deposits is Rs 10 lakh or more in a financial year, it needs to be reported. This limit also applies to fixed deposits

Current Accounts: When deposits or withdrawals is Rs 50 lakh or more in a financial year, it needs to be reported.

When no notice is issued?

Correct Income Declaration

If you properly declare your source of income correctly which you deposit as cash into your account through ITR filling evey year, then you will not face any issues.

Non-Taxable Income

If your income is not taxable or below the basic exemption limit of Rs 2.5 lakh.

When you can receive a notice?

If you under-report or misreport your income, then you will get notice and penalty will be 50-200%.

Restrictions on Cash Transactions

Receiving Cash Over Rs 2 Lakh

You cannot receive over Rs 2 lakh in cash-

  • from one person in a single day.
  • for a single transaction.
  • for transactions related to one event or occasion from one person.

Exceptions: This provision does not apply to government receipts, banking companies, or post offices.

Business Expenses

If you are running business than, expenses above 10,000 in single day in cash are not allowed.

Credit Card Bills

Paying credit card bills in cash over Rs 1 lakh is not allowed.

Cash Donations

Cash donations over Rs 2,000 are not allowed.

TDS on cash withdrawals

Withdrawals above INR 1 crore: 2% TDS is applicable.

Non-ITR Filers: For those who don’t file income tax returns –

  • 2% TDS applies to withdrawals over INR 20 lakh and
  • 5% over INR 1 crore.

Want To Know More About TDS on Cash Withdrawal Click Here

FAQs

Is there any limit for cash withdrawal from a bank?

Cash transactions limit is upto Rs. 2 Lakhs per day. Limit does not apply to withdrawals from banks and post offices, as it is clarified by the Central Board of Direct Taxes.

What happens if I withdraw 10 lakh cash from bank?

If you withdraw Rs 10 lakh or more in cash from a bank in one financial year, the bank is required to report this transaction to the IT department. This reporting applies to savings accounts and excludes current accounts and fixed deposits.

Can I deposit Rs 50 lakh in my savings account?

The cash deposit limit is Rs 10 lakh per financial year. When deposit is above 10 lakh amount, you may trigger a notification to the Income Tax department.


Comments

Post a Comment

Popular posts from this blog

Senior Citizen Train Ticket Discount: Government has issued a new statement regarding giving discount to senior citizens on train tickets, know the details here

Image
  Senior Citizen Train Ticket Discount: Once again a demand has been made in the Lok Sabha to give discount to senior citizens on train tickets. Senior Citizen Train Ticket Discount:  Railways has withdrawn the discount given to senior citizens on train tickets since the Corona period. However, from time to time there has been a demand to restore this concession given to senior citizens in trains. Even in the winter session of the Lok Sabha, some members raised the demand for increasing fare concessions and facilities for senior citizens traveling in trains. However, even before this, Railway Minister Ashwini Vaishnav has told in the Lok Sabha that during the train journey, every passenger is given an average subsidy of 53 percent on the train ticket. Apart from this, he also told who gets discount on tickets while traveling by train. Demand for discount in train tickets raised again During Zero Hour in the House, Janata Dal (United) MP Kaushalendra Kumar said that before the Corona ep
Read more

Cash Transaction Rules: Income tax rules on cash transaction between Husband-Wife and Son-Father, know rules

Image
  Cash Transaction Rules: Income tax keeps an eye on our every transaction. But is there any tax on cash transactions or can Income Tax send a notice? Or how much cash transaction can take place between you and your wife or between father and son? If you also have these questions in your mind, then let us know their answers… If you also transact money between father and son or between husband and wife, then this news is useful for you. Actually, every transaction of ours has an eye on income. In such a situation, a question arises in the minds of many people whether income tax notice can be received even on cash transactions? Let us know how much cash transaction you can do in your family. Income tax sends notice? According to tax experts, if you give money every month for household expenses or give money as a gift, then the wife is not liable for income tax. Both these types of amounts will be considered as the income of the husband. The wife will not receive any notice from the Incom
Read more

Have a Current/Savings Bank Account? Know the Cash Deposit Limits under Income Tax Act to avoid Penalties and Notices

Image
  Adhering to cash deposit and withdrawal limits is crucial to remain compliant with the Income Tax Act in India. This article aims to elucidate the various facets of cash-related regulations, encompassing savings and current accounts, fixed deposits, credit card bill payments, real estate transactions, and more.  Cash Deposit Limits in Savings and Current Accounts The Indian Income Tax Act imposes specific regulations on significant cash deposits in savings accounts. Individuals accumulating INR 10 lakh or more during a fiscal year must notify tax authorities.  For current accounts, this threshold is set higher at INR 50 lakh. Although not immediately taxed, financial institutions report transactions exceeding these limits.  Cash Withdrawal and TDS under Section 194N  Section 194N outlines TDS rules for cash withdrawals. A 2% TDS is levied on withdrawals exceeding INR 1 crore within a fiscal year. Non-filers face a 2% TDS on withdrawals over INR 20 lakh and a 5% TDS on amounts exceedi
Read more