Cash transaction limit as per Income Tax Act in India

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Published on 21 Oct 2019 / In Income Tax Saving

Cash transaction limit as per Income Tax Act in India

Under Income Tax Act there are various provisions which restrict cash transactions by following ways:

Restriction Through Disallowance
Section 35AD- Deduction in respect of expenditure incurred on setting up of a specified business
No deduction is allowed for cash payments exceeding Rs.10,000/- for an expenditure or an allowance claimed under business head.
In case of payment made for plying, hiring or leasing goods carriages, the limit stands enhanced to Rs. 35,000/-

Deductions under chapter VI –A

Section 80D :
Deduction for Medical Insurance & Health Check up
No deduction u/s 80D is allowable if paid in cash other than preventive health check-up expenditure.


Section 80G:
Deduction on Donation to Charitable Institutions
Deduction in respect of donation exceeding *Rs.2, 000/- is allowable where such sum is paid by any mode other than cash.

Section 80GGA :
Deduction for Donation for R&D
Deduction in respect of donation for scientific research or rural development exceeding Rs. 10,000/- is allowable where such sum is paid by any mode other than cash.

Section 80GGB
Contribution by Companies to Political Parties.
Deduction in respect of contribution given by companies to political parties is allowable where such sum is paid by any mode other than cash.

Section 80GGC-
Deduction for Donation to Political Parties. (Other than companies).
Deduction in respect of contribution given by any person to political parties is allowable where such sum is paid by any mode other than cash.

Section 68- Cash Credits

Section 69- Unexplained Investments

Section 115 BBC- Anonymous Donations

Restrictions through penalties
Section 269SS – Mode of Taking or Accepting certain Loans and Deposits

Section 269ST- Penalty on cash receipt of more than two lakhs
Section 269T- Repayment of loan in cash

 Income Tax Department to issue notice where cash transaction is above Rs 20,000 in Property Purchase.
Restriction through providing for incentivizing non-cash transactions

 TDS on Cash Withdrawal: TDS of 2% on cash withdrawal exceeding Rs 1 crore in a year from a bank account.

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