Income Tax Rules: How much cash is safe to carry in a day? Know this limit before transacting..

In today's digital era, as the way of making payments is changing, the monitoring of the Income Tax Department has also increased. If you think that unless you tell the department about a transaction, they will not know about it, then you are thinking wrong.

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

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 of more than Rs 2 lakh in a day. Whether it is taken in a single transaction or combined in multiple transactions.

According to experts, if a person takes Rs 5 lakh in cash in a day and the tax department gets information about it, then he may have to pay a heavy fine. Let us tell you that this limit does not apply to cash withdrawn from banks and post offices.

In what circumstances does this rule apply?

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

Taking more than Rs 2 lakh 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 institutions 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 payments

Sections 269SS and 269ST – Related to cash withdrawal

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

Important advice for taxpayers
If you are going to give a large amount to someone or take it from somewhere, then try the transaction through a banking medium like NEFT, RTGS, or UPI. This will not only save you from the notice from the Income Tax Department but your financial transparency will also be maintained.

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 existing law so that you do not get into any trouble due to any negligence of yours. 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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