Income Tax Limit for Cash Transactions | Avoid Penalty | In Tamil #incometax #cash #transactions

CASH TRANSACTIONS: Cash transactions involve directly using physical currency, like bills and coins, to pay for something immediately. They are a common way to exchange goods and services, but their use has decreased in recent times due to the rise of digital payments. There are two main limits related to cash transactions and income tax in India: 1. Limit for claiming tax deduction: Section 40A(3) of the Income Tax Act disallows tax deductions for cash payments exceeding ₹10,000 made to a single person in a single day. There are some exceptions, like payments up to ₹35,000 to transporters for vehicles. Cash Transaction Limits to Avoid Tax Penalties in India 2. Limit on receiving cash: Section 269ST prohibits receiving an amount of ₹2 lakh or more in cash in a single day, from a single person or related transactions for one event. This applies to receiving cash for business or professional transactions. RESTRICTION ON CASH TRANSACTIONS UNDER INCOME TAX ACT - ICmai Important to Note: 1. Exceeding these limits doesn't necessarily mean you'll be penalized. However, it can attract scrutiny from the Income Tax Department, and you may be required to explain the source of the funds. 2. There's a separate limit for cash withdrawals exceeding ₹20 lakh or ₹1 crore (depending on past tax filing) where banks deduct TDS (Tax Deducted at Source). View TDS on Cash Withdrawal u/s 194N FAQs | Income Tax Department To avoid penalties related to cash transactions and income tax in India, here's what you can do: For tax deductions: Make sure any cash payments exceeding ₹10,000 to a single person in a day are supported by proper bills and vouchers. This will help claim tax deductions without any issues. For receiving cash in business/profession: Avoid receiving cash of ₹2 lakh or more in a single day from one person. If a large sum is unavoidable, consider splitting the transaction into multiple smaller payments (cheque or electronic transfer) or convince the other party to do a bank transfer. General best practice: For any significant cash transactions, it's advisable to maintain a paper trail (bills, receipts) and digital records (bank statements for transfers). This will help you justify the source of the funds if questioned by the tax department. Remember, these are just some tips. For specific guidance on your situation, it's always recommended to consult a tax professional. For all your financial queries... Reach us at [email protected] 💌 WhatsApp - 99763 72162 Enjoy the Video till end. Do Subscribe, Share, Like and comment.    / @taxwithsuriya