Keeping cash is prevalent among Indians, but there are also many rules and precautions related to it. It is necessary to adhere to the Income Tax Department and other financial institutions regarding cash limits and sources. Awareness about the rules for keeping cash must be enhanced in April 2025, so that people can avert unwarranted legal troubles. Let’s know about the limits of keeping cash at home and the rules associated with it.
Cash Limit At Home
The Income Tax Act does not prescribe any fixed limit for cash that can be kept by an individual in India. Therefore, an individual can keep any amount of cash in his house as long as it is received from legitimate sources and entered in the Income Tax Return. If, however, the source of cash is not credible, the Income Tax Department may conduct investigations into that matter and treat it as undeclared income.
Importance Of Adherence To Rules
In the case of keeping cash, sections 68 to 69B of the Income Tax Act hold sway. If the person cannot prove the source of the cash, it may be treated as undeclared income, making him liable to pay a tax of around 78% along with a fine. Besides this, it is inadvisable to carry out any transaction in cash above ₹2 lakh as this may attract further penalty from the Income Tax Department.
Importance Of Digital Transactions
The Indian government is promoting digital transactions in several ways. Though a limit hasn’t been set on keeping cash, digital transactions can keep a person off the radar of the Income Tax Department. Digital transactions ensure safe transactions and transparency.
Risks Of Keeping Cash
Holding large cash amounts at home is susceptible to theft and other risks. Also, the holder may have to prove the source of the cash during any scrutiny mode by the Income Tax Department. Therefore, it must be checked properly as to what is the source and use of cash before keeping it.
Conclusion: There is no hard and fast rule about the limit of cash kept at home; however, following the provisions of the Income Tax Department about its source and use is mandatory. Digital transactions will assist one in keeping off legal trouble while also being safe and convenient. Before keeping cash, the source should be clarified and declared in the income tax return.
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