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Keeping cash at home is no longer as safe as before. If this cash does not match your declared income, the Income Tax Department can take strict action. Under the new rules, if found wrong, up to 84 percent of tax and fine can be recovered.
New Delhi. Nowadays many people keep cash at home for convenience, but this habit can now prove costly. The government has made monitoring of cash transactions more strict. If the cash kept in your house does not match your declared income and you are not able to tell its exact source, then the Income Tax Department can take major action. According to investment banker and CA Sarthak Ahuja, in such cases, recovery can be up to 84 percent including tax and penalty. This means that money kept in the house can cause loss instead of profit.
How to calculate tax and penalty up to 84%
If the Income Tax Department finds cash from your house during the search, for which there is no valid evidence, then it is considered as undeclared income. Heavy taxes, surcharges, cess and penalties are levied on this. CA Sarthak Ahuja says that overall this amount reaches about 84 percent. For example, if Rs 10 lakh in cash is seized without any reason, then tax and penalty up to Rs 8.4 lakh may have to be paid. In such a situation, the money left in hand remains very less.
How does income tax get information?
Often people think that how will anyone know the cash kept in the house, but the reality is different. Today banks and digital systems provide information about every major transaction to the department. The bank reports on cash withdrawals of more than Rs 10 lakh in a year, while TDS is immediately deducted on withdrawals of more than Rs 20 lakh. If any irregularity is found in any transaction, the department can investigate and conduct raids. That means cash movement is no longer hidden from the system.
Heavy punishment in property and cash loan also
The rules of giving and taking cash are not limited to household money only. If more than Rs 20,000 cash is taken while selling the property, then 100 percent penalty can be imposed on the entire amount. Similarly, there is the same penalty for borrowing more than Rs 2 lakh in cash from a single person in a day. Taking loan in cash from friends or relatives is also considered illegal. Experts advise that every transaction should be done through bank or digital medium, so that any legal problems can be avoided in future.
