5 Cash Transaction limits on investments to avoid Income Tax Notice

In any given economy, cash transaction plays a major role in accumulation of black money. 

The Indian Income Tax Department is watching like a hawk and has their eyes on any higher value cash transaction deals that are happening. Any trigger and they get in action. Hence investment platforms like mutual funds houses, banks or broker platform discourage cash transactions and promotes the use of digital payment and have a set limit up-to which one can invest in cash..  

Income tax department is very vigilant about high value cash transactions. You will get a notice from Income tax department if you violate the set limit while transacting in cash above this set limit. So let’s look at the 5 investment avenues and the cash transaction limit set on them. 

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  1. Mutual Fund/stocks/ Debentures/Bonds: People investing in any of these must ensure that the cash transaction doesn’t cross the 10 lakh limit. Failing to maintain this limit will lead to notice and checking of your last income tax returns by Income Tax Department. 
  2. Saving Account/Current Account: The cash deposit limit is tapped at 1 lakh rupees for savings account for an individual and the limit set on current account is 50 lakh rupees. Any violation of this limit will invite a notice from the Income Tax Department. 
  3. Bank Fixed Deposit: While bank allows cash deposits to be made towards fixed deposits, it tap for the same is set at 10 lakh rupees. Any breach of this limit will attract the attention of Income Tax department. 
  4. Real Estate: Income tax department discourages any cash transaction over and above the limit of 30 lakh for buying and selling of any real estate or property deal. Property registrar will have to report such transaction done for any non-moveable property. 
  5. Credit Card Bill Payment: Cash payment done towards the credit card bill payment that shoots above 1 lakh rupees doesn’t go well with the income tax department and will bring you in to their notice. Furthermore, if anyone pays more than 10 lakh rupees in one financial year to settle the credit card dues, raises a red flag and the Income tax Department will get digging into your details.
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Transacting in big ticket aka Cash can get you in trouble with the Income tax department who keeps a close watch on where all the money is coming and going.  Hence it is very important to plan your finances such that you never have to come across this situation which can trigger an action from the Income Tax Department’s end. 

32 replies on “5 Cash Transaction limits on investments to avoid Income Tax Notice”

Whenever I read or hear the word Income Tax, it remind me of the Harshad Mehta movie. Income Tax department is truly a hawk. You can’t cheat them. And it is better to keep our transactions fair and clear. As always it was a written post.

Honestly dear, I did not have any idea about this aspect of income tax notice. thank you so much for sharing this useful information. I had learnt a lot about the upper cash limit in different moving zone. indeed a useful post to learn avoid income tax notice.

Reading your pieces of finance or banking or taxing always leaves me enriched buddy. I am glad these limits are in place

Its always prudent to keep our transactions and dealings clean n clear to avoid the ire of the income tax department. A very well written and an informative post.

This is very informative, thank you so much for sharing this. I have joined my family business last year and slowly I am learning about it. We should keep our transactions clean and clear so that we have to face any problem at the time of filling return

Cash transactions are really inconvenient and can lead to hassles. It is also neccessary to keep track of your transactions, and that can be difficult with cash.The growth of digital transactions also has helped in minimizing cash transactions.

So much to know about income tax. Cash transactions can often be hazarduous. We should be careful while dealing with it.

Most of us will do such cash transactions and are not even aware of the implications. This post is so helpful for everyone on how the amount transacted can invite troubles from income tax department. I really appreciate your financial understanding and how you share the knowledge with all of us

This is helpful for everyone. When making financial decisions there are certain limitations we must keep in mind to unwittingly avoid legal hassles. Informative post.

Many people still do transactions in cash and it is good information for all of them to manage their transactions to avoid penalty. One may forget to keep tap on the credit card payments through cash, this is important point that can be missed.

Oh I did not know about the limits on cash transactions especially for fixed deposits and mutual funds. Good to know about this. It’s always good to be educated and knowledgeable about these things.

most of the high value transactions done in cash are under Incometax radar, apart from investments even the buying and selling of real estate etc also comes under scrutiny. you have explained things in very understandable way.

interesting post, i did not know about these limitations. i generally rely on the experts for all things income tax related, but you have simplified and explained these in a direct way which is helpful.

Gone are the days when we used to have a bulk cash at home with everything going digital and UPI’s this situation is hugely avoided. Your tips are certainly helpful to all who deal in cash.

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