NEW INCOME TAX RULES 2025 ON THE CASH TRANSACTIONS aim to regulate financial transactions and ensure compliance with tax regulations. These rules include the Reporting Limit as per Income Tax Act, Cash Transaction Limit (Section 269ST), Expenditure Limit (Section 40A(3)), Section 269SS, and Section 269T. Cash Withdrawal Limits have also been set to monitor large cash transactions. However, there are specified Exceptions to Cash Transaction Rules. Failure to adhere to these rules may result in receiving an Income Tax Notice.
TOPICS
- NEW INCOME TAX RULES 2025 ON THE CASH TRANSACTIONS
- Reporting Limit as per Income Tax Act
- Cash Transaction Limit (Section 269ST)
- Expenditure Limit (Section 40A(3))
- Section 269SS and Section 269T
- Cash Withdrawal Limits
- Exceptions to Cash Transaction Rules
- When You Got Income Tax Notice
Reporting Limit as per Income Tax Act
- There is no Restriction on Cash Transaction. There is Reporting Limit as High Value Transaction under SFT Provisions.
i – Saving or Joint account: – Aggregated 10 lakh or more in a year (April to March)
ii – Current account – Aggregated 10 lakh or more in a year (April to March) Cash Deposit or Withdrawals
iii – FD Limit – 10 Lakh
iv – Bank Draft / Pay Order – 10 Lakh
v – Cash Purchase or sale immovable property – 30 lakh
Cash Transaction Limit (Section 269ST)
Under Section 269ST of the Income Tax Act which was introduced to Combat Black Money and Promote Digital Transactions, the following cash transaction limit apply:
- Maximum Cash Receipt: – No Person can received cash of Rs 2 Lakh or more in any of following scenarios:
- in aggregate from a single person in one day.
- For a single Transaction.
- For transactions related to one event or occasion from a person
Also Read: – AY 2025-26 Tax Rates and Slab Changed
Expenditure Limit (Section 40A(3))
- Maximum Cash Payment: –
Payments Exceeding Rs 10,000 made in cash to a single individual in one day are not allowed as Tax-Deductible expenses.
Such payments must be made through banking channels (e.g. Bank, Transfer, Cheques) to be eligible for deductions. - Special Cases: –
For payments related to hiring or leasing Goods carriages, the limit is Rs 35,000
Section 269SS and Section 269T
These sections govern the acceptance and repayments of loans in cash. Any loan or deposit accepted in Cash Exceeding Rs 20,000 is prohibited under section 269SS, while Repayment exceeding this limit are restricted under section 269T.
| Transaction Type | Cash Limit |
| Cash Receipt (from one person) | Rs 2,00,000 per day |
| Cash Payment (for expenses) | Rs 10,000 per day |
| Cash loan acceptance | Rs 20,000 Per loan |
| Cash loan repayment | Rs 20,000 Per repayment |
Cash Withdrawal Limits
- Cash Withdrawal Limits: –
a) Under section 194N, TDS in applicable on cash withdrawals:
2% TDS on withdrawal exceeding Rs 1 crore in a Financial Year for those who have filed Income Tax Returns.
b) 2% TDS on withdrawals over Rs 20 lakh and 5% TDS on amounts over Rs 1 crore for individuals who have not filed returns for the past three years - More than Rs 2,000 Cash Donation in not allowed.
Also Read1: – GST Officer New Way of Inspection
Exceptions to Cash Transaction Rules
- Certain exceptions allow for cash transactions beyond specified limits, such as payments made to farmers for agricultural produce.
- Payments made in remote areas where Banking facilities are not available.
When You Got Income Tax Notice
- If you not filing ITR or not Declare the proper source of Income then you will get the Notice.
- Penalty 50-200% of the taxes
