So Much Cash Found? Heavy Penalties Incoming! Centre Tightens Rules on Unaccounted Money
Centre intensifies action on unaccounted cash with stricter rules and heavy penalties to curb illegal money holdings and undisclosed financial transactions.
Centre announces tougher rules and severe penalties for unaccounted cash and illegal money transactions.
The Central Government is set to introduce stricter norms on cash transactions as part of its effort to make India’s banking system more transparent. These new rules are expected to significantly impact the daily cash handling habits of both individuals and businesses.
According to investment banker Sarthak Ahuja, who shared details in a LinkedIn post, undisclosed or unaccounted cash may now attract a tax burden of up to 84%, including penalties, surcharges, and cess. This applies particularly in cases where the Income Tax Department finds unaccounted money during raids or seizures.
Ahuja noted that with these changes, both individuals and organisations must exercise extreme caution while dealing with high-value cash transactions.
What the New Rules Say
The revised guidelines focus on monitoring large cash movements more closely:
1. Cash Withdrawals to Be Tracked
Banks and financial institutions will closely watch high-value cash withdrawals.
Withdrawals above ₹10 lakh in a single financial year will be reported to the Income Tax Department.
2. TDS on Large Withdrawals
If cash withdrawal exceeds ₹20 lakh, banks will deduct TDS (Tax Deducted at Source) immediately.
3. Suspicious Withdrawals May Trigger Raids
Frequent or unusually large cash withdrawals may lead to scrutiny, including possible income tax raids or seizure actions.
100% Penalty on Certain Cash Transactions
Some cash transactions will now invite mandatory 100% penalty:
Accepting over ₹20,000 in cash during a property sale.
Receiving over ₹2 lakh in cash from a single person in one day.
Taking or giving cash loans of any value is completely prohibited—violations attract a penalty equal to 100% of the loan amount.
Precautions Tax Experts Suggest
With the government tightening the cash-control framework, taxpayers must follow these safeguards:
Conduct all high-value transactions strictly through banking channels.
Ensure proper, documented receipts for any cash received.
Avoid unaccounted cash at all costs, as penalties and tax burdens will be extremely high.
