For cash deposits of more than Rs 20 Lakhs in a year, rules change
In a bid to crack down on illegal and unrecorded cash transactions, the government had changed cash limit rules earlier in the year. Paying or receiving money beyond the set limits is subject to a heavy penalty of up to 100% of the amount paid or received.
Under new rules and regulations set by the Central Board of Direct Taxes (CBDT), people wishing to deposit more than Rs 20 lakh per year will now be required to submit their PAN details and Aadhaar card.
While previously there was a limit of Rs 50,000 per day before individuals needed to provide PAN details when depositing cash, the Income Tax Department had only set no annual limit.
But under the new rules, cash withdrawals and deposits of large sums of money in a single year in one or more banks must be tracked with PAN and Aadhaar details to create traceable details.
“Each person shall, when entering into a transaction specified in column (2) of the table below, cite his permanent account number or Aadhaar number, as the case may be, in the documents relating to such transaction, and any person specified in column (3) of said table, who receives such a document, ensures that said number has been duly quoted and authenticated,” the CBDT said in its May 10 notice.
Persons who do not have a PAN must apply for a PAN at least seven days before entering into any transaction above Rs 50,000 per day or above Rs 20 lakh per financial year.
The Income Tax Department, along with other central government departments, has updated and amended the rules to reduce the risk of financial fraud, illicit money transactions and other financial crimes in recent years. years.
The government also prohibits receiving cash worth more than Rs 2 lakh to restrict the use of cash in high value transactions. So, a person cannot accept more than Rs 2 lakh in cash, not even from close family.
The government has set various limits on cash transactions to curb black money. Let’s take a look at some cash transactions that can have serious consequences:
- Indian income tax laws prohibit cash transactions above Rs 2 lakh for any reason. For example, if you buy gold jewelry worth Rs 3 lakh in a single transaction, you should make the payment by cheque, credit card, debit card or bank transfer.
- You must follow this guideline even if you receive money from a family member.
- The government prohibits anyone from accepting cash worth more than Rs 2 lakh to limit the use of cash in high value transactions. So, in a single day, an individual cannot accept more than Rs 2 lakh in cash, even from close relatives.
- One cannot even accept a cash donation of more than Rs 2 lakh from a single donor on a single occasion. Those who accept cash over Rs 2 lakh in violation of this clause may face a penalty equivalent to the amount received.
- Make sure you don’t pay cash for health insurance when tax planning. If taxpayers pay their insurance premium in cash, they are not eligible for the Section 80D deduction. It must be done through the banking system.
- If a person takes out a cash loan from a financial institution or a friend, the total amount cannot exceed Rs 20,000. The same regulations apply to debt repayment. The repayment of a loan of Rs 20,000 must be done through a financial channel.
- In a real estate transaction, the maximum amount allowed is also Rs 20,000. The limit remains the same even if a seller accepts an advance.
- As for self-employed taxpayers, they cannot claim any expense above Rs 10,000 if paid in cash to a single person in a single day. The law establishes a higher threshold of Rs 35,000 for payments made to a carrier.