How Much Cash Can You Keep at Home? Know What the Law Says
In the age of digital transactions, many people continue to rely on cash, keeping significant amounts in their wallets, cupboards, and safes at home.
In the age of digital transactions, many people continue to rely on cash, keeping significant amounts in their wallets, cupboards, and safes at home. While there’s no legal restriction on how much cash one can store at home, the Income Tax Department has set clear guidelines to ensure transparency and accountability.
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Valid Source of Income Is Key
According to the Income Tax Act, there is no fixed limit on the amount of cash that can be kept at home. However, all the cash must be from a legitimate and declared source of income. If Income Tax officials conduct a raid, the individual must be able to produce documents proving the source of the cash. Failure to do so can result in hefty penalties.
Also Read: Your ATM Withdrawals May Soon Cost More — RBI Hikes Interchange Fees
Heavy Penalty for Unexplained Cash
If cash stored at home is found to be undisclosed or unaccounted, it can be taxed up to 137% under current laws. In such cases, under Section 132 of the Income Tax Act, the authorities also have the power to seize the entire amount.
Restrictions on High-Value Cash Transactions
While storing cash is not illegal, there are restrictions on cash transactions during a financial year:
- Cash transactions above ₹20 lakh in a financial year can attract penalties.
- Purchases above ₹2 lakh in cash are not allowed without providing PAN and Aadhaar details.
Final Word
To avoid any trouble during an Income Tax raid:
- Maintain proper documentation of the source of cash.
- Avoid high-value cash transactions without PAN and Aadhaar proof.
- Stick to digital payments wherever possible for better tracking.
Having cash at home isn’t a crime—but failing to explain its origin can lead to serious consequences.
