Everything takes place online in this era of digitization. Everything can be done with a single click, including shopping and payments. Cash is still preferred by many, nonetheless, for transactions.
despite the fact that the world is becoming more computerized. Many people still keep cash on hand and utilize it for transactions, even if everything from shopping to payments is moving online. Occasionally, reports of raids by the Income Tax Department also make the rounds. It’s normal to worry how much money one can lawfully keep at home in such a circumstance. Let’s see what the law has to say about this.
Is it illegal to keep cash on hand?
Whether there is a legal cap on the quantity of cash you can keep at home is the first crucial question. There is no cap on how much cash you can keep at home set by the Income Tax Department. It is not against the law to keep cash, no matter how much you have. The only prerequisite is the existence of a valid revenue source. You can safely keep any quantity of money at home as long as you can demonstrate that it is part of a legitimate transaction, your pay, or business income. When you are unable to verify the source of your income, problems occur.
What is stated in the Income Tax Act?
The Income Tax Act’s Sections 68 through 69B address the regulations pertaining to money and property.
Section 68: Any money that appears in your cashbook and passbook but for which you cannot provide an explanation will be deemed unclaimed income.
Section 69: Cash or investments that you cannot account for shall be regarded as unreported income.
Section 69B: You will be subject to tax and penalties if you have cash or assets that exceed your declared income but you are not revealing where they came from.
If you are unable to provide the source…
The full amount of money found in your home during a search or investigation will be deemed unreported income if you are unable to give a proper account of it.
You may have to pay high taxes.
It is possible to be fined up to 78% of the sum that was confiscated.
A case may also be brought if the agency suspects tax evasion.
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