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Limit for cash payment in property in India: If you are going to buy a property or want to sell your property, then it would be better to know all the rules related to the transaction. Buying and selling property is a big deal. In such a situation, many times the person in front also offers to do the transaction in cash. It is not that you can pay the entire price of the property in cash. There are rules for this too and if you exceed this limit of transactions in cash, you may also get an income tax notice.
No matter how big the deal is, you cannot take more than Rs 19,999 in cash. For this, changes were made in sections 269SS, 269T, 271D and 271E of the Income Tax Act in 2015. Of these, the change made in Section 269SS is very important, in which it has been mentioned about the penalty in such a situation. The government did this with the intention of stopping black money. Actually, after a transaction in cash, it becomes difficult to find out whether the cash has been earned legitimately or illegally.
Under Section 269SS, if a person takes Rs 20,000 or more in cash for selling land (even if it is being purchased for agriculture), house or any other kind of immovable property, then 100 percent penalty will be imposed on him. Let us try to understand this from the example given below.
What does 100 percent penalty mean?
Under Section 269SS of the Income Tax Act, if a person is taking Rs 20,000 or more in cash while selling property, then he will have to pay the entire amount as penalty. That means whether you have taken Rs 50,000 or Rs 1 lakh, the entire amount will go to the Income Tax Department as penalty.
The story doesn't end here
Another section 269T of Income Tax serves to rub salt on the wound. Suppose the deal gets canceled for some reason. If the buyer asks for the money back in cash from the property dealer or seller, there will be a penalty once again. If an amount of Rs 20,000 or more is returned in cash, the entire amount will go towards penalty like Section 269SS. However, this law does not apply to the government, government company, banking company or any specific person and institution identified by the Central Government.
How to transact?
You can transact up to Rs 19,999 in cash in property deals. It will appear in your registry. You can pay more than this amount through check or electronic transaction (Internet Banking). Keep in mind that registrars generally do not cancel property registration due to cash transactions. They will do the registration but will send the data related to the cash to the Income Tax Department. After this you may get into trouble.