These days, many people keep cash at home, thinking that it will make their work easier. However, the government has tightened controls on cash. If the cash kept at home does not match your income or you cannot explain the reason, the Income Tax Department can impose stiff penalties.
If you keep a lot of cash at home, then first you should understand the income tax rules, otherwise you may suffer a lot of losses. Go through this article and know how much tax you will have to pay on the cash you will kept at home and how much penalties will imposed on you if the cash kept at home does not match your income or you cannot explain the reason.
How Much Penalties will Imposed if Income Tax Seizes More Cash From your House?
According to the CA, if the Income Tax Department seizes cash from your house for which you cannot provide any valid reason or proof, then the total tax and penalty could be around 84%. This includes various surcharges, cesses and penalties. This means if cash worth Rs 10 lakh is found without any reason, the tax and penalty could be around Rs 8.4 lakh. Government is now keeping a close watch on all major cash transactions. If anything suspicious is found, the department can search and seize it.
How the Income Tax Department Detects Cash?
People often think, “How will anyone know if you keep cash at home?” But today, banks and digital payment systems constantly send information about your transactions to the department.
- If you withdraw more than Rs 10 lakh in cash from your savings account in a year, the bank sends this information to the Income Tax Department.
- If you withdraw cash exceeding Rs 20 lakh, the bank deducts TDS there itself.
- If the department finds anything suspicious in any transaction, it can immediately initiate a search and investigation.
Therefore, every cash transaction is recorded in the system, which provides information to the department.
Heavy Penalties for Accepting Cash for Property
Many people still accept cash when buying or selling property, but it is risky. If you take more than Rs 20,000 in cash after selling a property, you may have to pay a penalty of 100% on that entire amount. This means you will have to pay a separate penalty equal to the amount of cash taken. Similarly, if you take more than Rs 2 lakh in cash from a customer in a day, then a penalty of 100% will be imposed on the entire amount.
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