Daijiworld Media Network – New Delhi

New Delhi, Jul 8: The Income Tax Act, 2025 prescribes strict limits on cash transactions across various financial activities to promote transparency and curb tax evasion. The rules cover cash collections, loans, business payments, property transactions, donations and withdrawals, with violations attracting penalties in several cases.

Under Section 269ST, individuals and businesses cannot accept Rs 2 lakh or more in cash from a single person in one day, for a single transaction, or for multiple transactions linked to the same event or occasion. Any violation may attract a penalty under Section 271DA, equal to the amount of cash received.

The Act also places restrictions on cash loans and deposits. Section 269SS prohibits the acceptance of cash loans, deposits or property-related advances of Rs 20,000 or more.

Similarly, Section 269T bars the repayment of loans or deposits of Rs 20,000 or above in cash. Violations of Sections 269SS and 269T can result in penalties under Sections 271D and 271E, equivalent to the value of the transaction.

For businesses, cash payments exceeding Rs 10,000 to a single person in one day are not eligible for tax deductions. However, the limit has been increased to Rs 35,000 for payments made to transport operators.

The law also imposes restrictions on cash dealings in property transactions. Under Section 269SS, cash advances or payments of Rs 20,000 or more related to the transfer of immovable property are prohibited. Non-compliance may attract penalties and increased tax scrutiny.

Taxpayers seeking deductions under Section 80G cannot claim tax benefits for cash donations exceeding Rs 2,000. Donations above this limit must be made through recognised banking channels to qualify for deductions.

While there is no legal limit on cash withdrawals from one's own bank account, large withdrawals may be reported to the Income Tax Department. Additionally, Tax Deducted at Source (TDS) under Section 194N may apply if withdrawals exceed the prescribed threshold.

The Act also clarifies that splitting a large payment into multiple smaller cash transactions will not help avoid the rules. If the payments are linked to the same transaction, event or occasion, they may be treated as a single transaction, potentially attracting penalties under the law.