Keeping cash at home is a common practice in many households. While there is no fixed limit on how much cash you can keep, the Income Tax Department has certain rules and guidelines that every individual should know. Not following these rules can lead to penalties or unwanted scrutiny.
No Specific Limit, But Be Careful
Legally, you are allowed to keep any amount of cash at home. However, you must be able to justify the source of that money. If during an Income Tax raid or inquiry you fail to provide proper documentation, the cash may be seized, and you could face penalties.
If authorities find a large sum of cash without supporting documents like salary slips, withdrawal receipts, or business records, it may be treated as undisclosed income. In such cases, a penalty of up to 100% of the unaccounted cash can be imposed.
Best Practices to Avoid Trouble
Always keep a record of withdrawals from your bank.
Ensure that any large cash transaction is reported properly.
Avoid keeping excessive cash at home; use digital payments or bank accounts for safety.
PAN card will have to be shown
Let us tell you that according to the Central Board of Direct Taxes, if you withdraw or deposit more than 50 thousand rupees in your account at one time, then you will have to show your PAN card. If a person has not filed an income tax return for the last 3 years and withdraws more than 20 lakh rupees from the bank in a financial year, then he will have to pay TDS of 2 percent on transactions of 20 lakh rupees and up to 5 percent on transactions of more than 1 crore rupees. But those who have filed ITR can get some relief in this matter.
