Cash Limit: Today most of the transactions are happening online, yet many people prefer to keep cash at home for emergency or convenience. But the question is, is there any legal limit on keeping cash at home?
What rules does the Income Tax Department make for this and what can be the risk of keeping it without disclosing the source?
In today’s digital lifestyle, most people do everything online, from paying electricity bills to recharging their mobiles, yet the habit of keeping cash at home has not ended. Many people consider it a safe option for emergencies or sudden expenses. But when it comes to keeping a large amount of money, a question arises in people’s mind—is there any limit on keeping cash at home? Does the Income Tax Department make any rules on this? And what problems can arise if the source of the money kept at home cannot be disclosed?
This topic is also important because due to lack of correct information, many people can unknowingly come under the purview of the law. In such a situation, it becomes important to know whether keeping cash at home is completely legal or whether some necessary conditions have to be fulfilled for this.
Is there any limit on keeping cash at home ?
According to the Income Tax Department, there is no legal restriction on how much cash can be kept at home. That is, you can keep as much cash as you want according to your convenience. However, it is important that this money is part of legitimate income and its source is clear.
Why is it important to have proof of the source ?
Although there is no set limit for keeping cash, the tax department does look at where the money came from. If you are unable to provide proof of this, it can be considered as undeclared income. Therefore, it is important to keep a record of every source, be it salary, business income or money from selling property.
Importance of ITR and documents
If the cash you have is visible in your Income Tax Return (ITR), you can easily answer any queries. It is also important to keep the receipt or agreement for the amount received on selling the property. Proper documents not only save you from legal problems but also prove your financial position to be strong.
What harm can happen without proof ?
If the tax department finds cash in your house and its source cannot be disclosed, then there can be a heavy penalty or legal action. In many cases, there is a provision of penalty for undeclared income as well as jail sentence. Therefore, keeping cash is not wrong, but it is very important to prove its accountability.
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