Home Cash requirements: If you have cash on hand, be sure you follow the requirements; if not, the Income Tax Department may take legal action

Home Cash requirements: If you have cash on hand, be sure you follow the requirements; if not, the Income Tax Department may take legal action

Home Cash requirements: If you have cash on hand, be sure you follow the requirements; if not, the Income Tax Department may take legal action

The government has implemented many cash-related regulations in an effort to combat issues including tax evasion and black money. You have to be aware of these guidelines.

Since the Corona era, there has been a dramatic rise in digital transactions. Nowadays, a big portion of people choose to deal online. However, cash is still used for all kinds of transactions even now. Those who are not comfortable with the internet also like paying with cash for all of their work rather than doing transactions online.

People continue to retain large sums of cash at home as a result. However, in order to combat issues such as tax fraud and black money, the government has implemented several monetary regulations. How much cash can you retain at home in such a case is a subject that often crosses our minds but is rarely discussed. Learn more about it here:

What guidelines apply to cash management?

Income Tax regulations state that there is no specific restriction or limitation on holding cash on hand. You may keep any quantity of cash at home if you are able to support yourself financially. However, you need to have a source for that sum. You will be required to provide the source if the investigative agency questions you in the future. Additionally, the ITR declaration has to be presented. This implies that you don't need to worry about how much cash you keep at home if you haven't made money by dishonest ways.

In certain cases, action may be done.

You may have serious issues if you are unable to provide the investigating agency with the source of the funds. In this case, the problem is reported to the investigative agency. Next, the amount of tax you have paid is verified by the Income Tax Department. Meanwhile, the Income Tax Department may take legal action against you if unreported funds are discovered during the computations. You may be subject to taxation of up to 137% of the concealed amount in such a case.

What additional guidelines apply to cash?

The Central Board of Direct Taxes states that you would need to provide your PAN card if you take out more than Rs 50,000 in cash at once. A person is required to pay TDS under Section 194N of the Income Tax Act if they withdraw more than Rs 20 lakh within a financial year. This regulation, however, only applies to individuals who have not submitted an income tax return (ITR) for three years in a row.

In this case, those who have filed ITRs get some relief. These individuals are exempt from paying TDS when withdrawing money from banks, post offices, or cooperative bank accounts up to Rs 1 crore in a fiscal year. In this case, 2% TDS must be paid if more than Rs 1 crore is taken out of the bank in a single year. You would be required to pay 2% TDS on transactions under Rs 20 lakh and 5% on transactions above Rs 1 crore if you haven't submitted an ITR for the previous three years.

Credit-debit card transactions over Rs 1 lakh at a time can be scrutinised. Other than this, nothing may be purchased with cash for more than Rs 2 lakh. You will also need to provide your PAN and Aadhaar here if you choose to proceed with this.