Income Tax: If you transact in cash more than this limit in a day, the Income Tax Department will send a notice to your home..

Income Tax: If you transact in cash more than this limit in a day, the Income Tax Department will send a notice to your home.. India-employmentnews | 2025-04-22 19:15:02

In today's digital age, along with the change in payment methods, the surveillance of the Income Tax Department is also increasing. If you think that you can hide transactions without giving information, then this notion is wrong.

The Income Tax Department keeps a close watch on big cash transactions, and even a small mistake can get you an Income Tax Notice.

If you take more than 2 lakh cash, you may have to pay a fine -

Under section 269ST of the Income Tax Act, there is a ban on taking cash payments of more than Rs 2 lakh in a day. Whether it is taken in a single transaction or combined in multiple transactions.

Under what circumstances does this rule apply?

According to section 269ST, no person or entity can take more than Rs 2 lakh in cash in a day in three situations:

Taking more than Rs 2 lakh in cash from a single person in a day

Taking more than Rs 2 lakh in a single transaction

Taking more than Rs 2 lakh for a transaction related to a single occasion or event

However, there are some exceptions to this. Apart from banks, government entities do not come under the purview of this rule.

Which sections of the Income Tax Act apply to cash transactions?

Sections 40A (3) and 43 – Related to cash payment

Sections 269SS and 269ST – Related to taking cash

Section 269T – Related to cash repayment of loan or deposit

Important advice for taxpayers-

If you are transacting a large amount, do it through a banking medium like NEFT, RTGS, or UPI. With this type of transaction, you can avoid the Income Tax Department notice, as well as your financial transparency is maintained. This will ensure that the record of your transactions is clear and secure.

In today's time when digital payments are being promoted, the strictness of the tax department on cash transactions is not surprising. Therefore, you must be aware of the current law so that you do not get into any trouble due to your negligence. Avoid taking or giving cash of more than Rs 2 lakh, by doing this you will not only keep yourself safe but this step will also save you from heavy fines.

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