Income Tax News: How much cash can you keep at home? Income tax rules explained

Income Tax News: In the contemporary era dominated by digital transactions, the practice of hoarding cash at home has significantly diminished. However, individuals may still wonder about the permissible limits for keeping cash at home and the associated penalties. According to Income Tax rules, there is no specified limit on the amount of cash one can keep at home. However, in the event of an investigation or raid by relevant authorities, individuals are required to disclose their income sources and provide explanations for the cash holdings.

Compliance and Documentation: Essential for a Smooth Process

For those who diligently file their Income Tax Returns (ITR) annually, compliance becomes a crucial factor. The cash held at home should align with the declared income in the ITR. Having comprehensive documentation and a clear understanding of the cash flow sources can prove beneficial during any scrutiny. Individuals with consistent and accurate ITR filings generally encounter fewer challenges in such situations.

Potential Challenges and Consequences: Addressing Tax Liabilities

In cases where individuals fail to provide a satisfactory account of their cash holdings during an investigation, challenges may arise. The Income Tax Department has the authority to levy up to 137% tax on the undisclosed cash amount. This implies an additional 37% tax burden on top of the undisclosed cash. Ensuring transparency and adherence to tax regulations can mitigate the risk of penalties and facilitate a smoother resolution in the event of any scrutiny.

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