Under the new income tax rules, the government has imposed strict rules regarding cash transactions. If you think that your money is your income, your property, and you can keep as much cash as you want, in any way you want, then it could be a big mistake. If you find a large amount of cash and are unable to explain its source or reason, you may face heavy penalties. Recently, in a LinkedIn post, investment banker and chartered accountant Sarthak Ahuja explained why it is important to keep track of certain types of cash transactions. The government is now cracking down on undisclosed or unaccounted cash. Keeping more cash at home than the prescribed limit may also attract tax. If the Income Tax Department finds cash in your house for which you cannot give any valid reason, then you may have to pay heavy tax and penalty.
CA says: 84% tax may be imposed
Sarthak Ahuja wrote, “Under the new income tax rules, unaccounted cash found at your home will attract a total of 84% tax.” He further explained, “If any cash is found at your house which you cannot account for, then a total of 84% tax, surcharge, cess and penalty will be levied on it.” Now you must be wondering how the Income Tax Department will know?
“The Income Tax Department keeps track of your cash transactions through your bank transactions,” Ahuja said. For example, “If more than Rs 10 lakh is withdrawn from a savings account in a year, the bank has to inform the Income Tax Department.” He further said, “If you withdraw more than Rs 10 lakh in cash in a year, the bank will report it to the tax department. If you withdraw more than Rs 20 lakh, the bank will also deduct TDS. And if the department suspects any foul play, they can initiate search and seizure action against you.”
Cash transactions related to property are also under investigation
Cash transactions related to property are also under strict surveillance. Ahuja said, “If you take more than ₹20,000 in cash while selling a property, then 100% penalty will be imposed on that amount. If you take more than ₹2 lakh in cash from a single customer in a day, then 100% penalty will be imposed on the entire amount.”
It is also illegal to borrow cash from family and friends
Borrowing money in cash from friends or relatives is also against the law. He said, “If you take a loan in cash from someone, then 100% penalty will be imposed on the entire loan amount, because taking any loan in cash is prohibited.” In today’s technologically advanced government systems, banks and payment apps constantly share details of your transactions with the tax department. This makes it easier for the department to detect any discrepancy between cash transactions and your reported income. Finally, he warned, “Remember, the government has so much information today that it can catch anyone based on their transactions.”
