Income tax department’s keen eye on cash transactions, penalty on transactions of more than 2 lakh can be fined

In today’s digital era, along with changes in payment methods, the monitoring of the Income Tax Department has also become strict. If you are thinking that your transactions can hide without giving information, then this thinking is wrong. The Income Tax Department is constantly monitoring big cash transactions and even a small mistake can give you income tax notice.

Ban on cash more than 2 lakh rupees: It is illegal to take more than Rs 2 lakh cash in a day under section 269st of the Income Tax Act, whether it is the same transaction or several transactions.

When does this rule apply? According to section 269st, no person or institution can take more than 2 lakh rupees in a day in these three situations:

1. Taking more than 2 lakh cash from the same person in a day.
2. Taking more than 2 lakh cash in one transaction.
3. Taking more than 2 lakh cash for transactions related to any one incident or opportunity.

However, banks and government institutions are outside the purview of this rule.

Major sections related to cash transactions:

• Section 40A (3) and 43 – Cash Payment Rules
• Section 269SS and 269ST – Cash Rules
• Section 269T – Cash Reperation Rules of Lone or Deposit

Important advice for taxpayers: If you are doing large transactions, make payment through digital means like NEFT, RTGS or UPI. With this, you can avoid income tax notice and your financial transparency is also maintained. Today, when digital payment is being promoted, the Income Tax Department is natural on cash transactions.

Therefore, it is important that you be aware of the existing rules and avoid cash transactions worth more than Rs 2 lakh, so that the penalty can be protected.