Breaking it Down: Home Cash Limits and Income Tax Rules Unveiled

Following Income Tax raids that uncovered a staggering Rs 351 crore in cash at the premises of Congress MP Dhiraj Prasad Sahu, the politician has addressed the issue. He clarified that the funds are derived from his family's liquor business, emphasizing the absence of any political connections.

In an exclusive interview, Sahu expressed his concern, saying, "In my 30-35 years of political career, this is the first incident of this kind, which hurts me. The current situation saddens me. I can confirm that the recovered money belongs to my business. The cash is linked to my liquor firms; it is the revenue from liquor sales.

Understanding Cash Limits: Insights into Income Tax Regulations

In the wake of this notable raid, inquiries arise regarding the acceptable thresholds for keeping cash at home and the repercussions of the latest Income Tax regulations.

Per the Income Tax Act, there isn't a defined limit on the cash amount one can store at home. However, during an income tax raid, it becomes vital for individuals to justify the source of the money. 

Undocumented funds can lead to penalties, with income tax officials empowered to confiscate unexplained money and impose fines reaching up to 137% of the total amount.

Important Cash Guidelines to Keep in Mind

1. No Cash Transactions of Rs 20,000 or More for Loans or Deposits: The income tax department strictly prohibits accepting Rs 20,000 or more in cash for loans or deposits.

2. PAN Numbers Required for Transactions Exceeding Rs 50,000: Individuals must provide PAN numbers for deposits or withdrawals exceeding Rs 50,000 at a time, as per the Central Board of Direct Taxation.

3. Scrutiny for Cash-Based Asset Transactions Above Rs 30 Lakh: Engaging in the purchase or sale of assets with cash exceeding Rs 30 lakh may attract scrutiny from investigating agencies.

4. Investigation for Credit-Debit Card Transactions Above Rs 1 Lakh: Transactions exceeding one lakh rupees through credit or debit cards at a time may trigger investigations.

5. 2% TDS on Withdrawals Exceeding 1 Crore: Individuals withdrawing more than Rs 1 crore in cash from the bank in a year are liable to pay a 2% TDS.

6. Fines for Cash Transactions Over 20 Lakhs: Cash transactions surpassing 20 lakhs in a year may attract penalties, and the purchase and sale of cash property over 30 lakhs can prompt investigations.

7. Cash Payment Caps: Limits include not paying more than 2 lakh in cash for purchases without PAN and Aadhaar details, and restrictions on transactions above Rs 1 lakh with credit-debit cards.

Family Transactions and Loans: Accepting cash exceeding Rs 2 lakh from a relative in a day or obtaining a loan exceeding Rs 20,000 in cash from anyone else is not allowed. Comprehending these regulations is crucial to steer clear of legal consequences and maintain adherence to income tax norms.

Also Read: File Income Tax Returns for FY 2022-2023 by December 31, 2023, to Avoid Penalties and Interest Charges

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