New Delhi: As India moves further into the era of digital payments, the government has tightened its grip on large cash transactions to prevent black money and ensure financial transparency.
While keeping cash at home is not illegal, citizens must be cautious. The Income Tax Act does not limit how much money one can keep at home. But during a raid, one must clearly explain the source of the cash. If the cash is unaccounted for, it may be seized, and the person may face a penalty of up to 137% of the amount.
To avoid legal trouble, every citizen should be aware of key cash transaction rules issued by the Income Tax Department and Central Board of Direct Taxes (CBDT).
- Cash Transaction Rules You Must Know
You cannot accept cash over Rs 20,000 for any loan or deposit. - For immovable property, cash payments above Rs 20,000 are also not allowed.
- Cash transactions above Rs 20 lakh in a financial year can invite scrutiny if they are unaccounted for.
- If you deposit or withdraw over Rs 50,000 in cash at a bank, you must provide your PAN.
- If you deposit Rs 20 lakh in a year, both PAN and Aadhaar details are mandatory.
- Buying or selling assets in cash above Rs 30 lakh can lead to an income tax investigation.
- A credit or debit card transaction above Rs 1 lakh at a time can also be flagged for investigation.
- You cannot take over Rs 2 lakh in cash from a relative in a single day — this must go through a bank transfer.
- Loans above Rs 20,000 in cash are not allowed.
- Donations over Rs 2,000 must be made in non-cash modes.
Additional Rules to Remember
Withdrawals over Rs 1 crore per year from a bank account will attract 2% TDS (Tax Deducted at Source).
- No purchase above Rs 2 lakh in cash — PAN and Aadhaar must be shown if done.
- Violating these rules may lead to fines, investigations, or income tax raids.
Go Digital, Stay Safe
With digital wallets, UPI, internet banking, and cards becoming more common, authorities urge people to avoid large cash dealings. These steps are aimed at improving transparency, curbing black money, and making the financial system more accountable.
The government’s message for 2025 is clear:
“Say No to Cash Transactions. Go Digital. Stay Secure.”
