Often, there are reports in newspapers and on TV that the Income Tax Department raided someone's house and recovered crores of rupees in cash. In such a situation, a question arises in the minds of common people about how much cash is legal to keep at home. Is there any fixed limit for this? Actually, there is no legal limit for keeping cash at home in India. The Income Tax Department has not fixed any upper limit on how much money you can keep at home. But the condition is that the cash kept with you should have come from a legal and declared source. That is, if the Income Tax Department asks, you will have to tell where this money came from.

Why is it necessary to disclose the source?

Sections 68 to 69B of the Income Tax Act make it clear that if the source of the cash or property kept with you cannot be disclosed, then it will be considered as undeclared income. In such cases, the tax department can impose not only tax but also a penalty of up to 78 percent.

Keeping records is important.

Although there is no limit on keeping cash, if you have a large amount, you must have solid proof of its source. For this, it is necessary to have documents of your Income Tax Return (ITR), salary slip, business record, or savings. These will act as a shield for you during the investigation.

Who should pay special attention?

This rule is stricter for those doing business. The balance shown in their account books and cashbook should match the cash kept at home. It is also important for common people that before keeping large amounts of cash at home, its source can be proved by a bank statement, savings, or any other official document. Keeping cash at home is not at all illegal in India. But if the amount is large and its source cannot be told, then problems can arise. Transparency and correct documents keep you safe from tax investigation. Therefore, if you keep money at home, its account should always be clear.

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