Cash transaction limits

 

Q: How much cash can be kept at home by any person legally?

A: There is no such limit for cash to be kept at home. But, in case of any inquiry, you need to explain the source of such cash balance. Unexplained source can lead to a penalty up to 137% of cash balance.

Q: Is there any tax on cash withdrawal from bank?

A: There was no tax on cash withdrawal from bank without any limit. However, as declared in Union Budget in July 2019, there is 2% TDS (Tax deducted at source) by bank on cash withdrawals exceeding Rs 1 crore in a financial year.

Q: Is there any limit of cash deposit in bank account?

A: There is no such limit or tax on cash deposit. The depositor should have rightful explanation of cash deposit and such deposit should be properly dealt with, while filing the Income Tax Return. In case of large cash deposits, bankers are required to report such transactions to Income tax department, these are noteworthy in this context. In case of saving account, the cash deposit of more than Rs 10,00,000 is reported by bank to Income tax authorities. This limit is Rs 50,00,000 in case of current bank accounts. Further, you need to give your PAN number while depositing the cash of more than Rs 50,000. Similarly, in case you are making demand draft or pay order exceeding Rs 50,000, you need to share PAN number.

Q: What is the cash limit in credit card bill payment?

A: Above limits of cash deposit in bank account applies.

Q: What is the limit of cash payment for purchase of immovable property?

A: In total sale consideration, only Rs 20,000 can be accepted in cash by property seller. Any amount received more than Rs 20,000 is subject to penalty up to 100%.

Q: What is the cash expense limit in case of business expenditure?

A: You can only make cash payments up to Rs 10,000. Any amount paid more than Rs 10,000 is not allowed as business expenditure as per Section 40A(3A) of the Income Tax Act, 1961.

Q: What is the cash expense limit in case of personal expenditure?

A: There is cash limit of Rs 200,000 (Rupees Two lacs) per event as per Section 269ST.

Q: What is the cash limit for payment to transporters?

A: In the case of payment made for plying, hiring or leasing goods carriages, the limit is Rs 35,000 (Rupees Thirty Five thousand) as per Section 40A(3A) of the Income Tax Act, 1961.

Q: How much cash expense is allowed as marriage expenditure?

A: There is no such limit, source of any amount spent is required to be explained by person doing the expense. However, above limit of Rs 200,000 is applicable and can result into penalty up to 78% in case of breach of this limit.

Q: How much cash can be given to family member as gift?

A: Cash gift with defined sources can be given up to Rs 200,000 to family members.

Q: Can a partner introduce or withdraw capital in cash into partnership firm more than Rs. 2 lakhs?

A: As Partnership Firm is included in Definition of Person under the Income Tax Act, Any withdrawal of capital in Cash by a Partner of Rs 2 Lakhs or more or any Capital Introduced or Addition in Capital in Cash amounting to Rs 2 Lakhs or more will invite penalty u/s 271DA.

Although there is no bar for introducing capital in cash less then Rs. 2 lakhs by partner only source of such cash should be clear.

Q: What is the limit for cash loans?

A: The limit is Rs 20,000 (Rupees Twenty thousand) as per Section 269SS and 269T is applicable.

Q: How much cash can be carried in flights, train, metro or such other public transport?

A: Any large cash so detected is very risky. Though there are no limits specified, the above limits Rs 200,000 are applied in general. During election times, as per guidelines of Election Commission of India, one need to carry three documentary proofs for carrying any amount exceeding Rs 50,000. These proofs should include business proof, legal source and end use.

Q: How much cash gift can be given to persons other than family member?

A: The above limit of family members is applicable in this case too. However, any gifts received from non-family members exceeding Rs 50,000 in any form is taxable in the hands of gift recipient.

Q: Can the donation be given in cash?

A: There is no such limit. But in case of cash donation exceeding Rs 2,000, the deduction under Section 80G is not allowed.