Cash Transaction Limits Under The Income Tax Rules; Income tax notice will arrive at home if transactions are done by ‘Cash’! Know what the Income Tax Act says
Not more than 10 lakhs in bank account or FD
The Income Tax department can investigate you if you deposit Rs 10 lakh or more in cash in any bank account in a financial year. Note that you cannot deposit more than Rs 10 lakh in a year even in a current account with a maximum limit of Rs 50 lakh in a FD. If you want to deposit more than this amount, you can pay online or by check.
Use of cash for credit card bill payments or investments
If you use cash to pay a bill of more than one lakh rupees, you may be asked for its source. Also you cannot use too much cash for investment. If you are dealing cash in any shares, mutual funds or bonds then also you cannot use more than 10 lakhs in a financial year. If you do so, the Income Tax department may send you a notice.
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Rules for paying cash for property
Cash is used extensively in the real estate sector. If you pay cash to buy a property, it’s important to know the rules. In such a situation, after making a big cash transaction with the property registrar, the report goes to the income tax department. If you buy or sell property worth Rs 30 lakh or more in cash, the Income Tax Department gets information about it. So always remember these rules of dealing with cash, otherwise you may get into trouble.
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