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UPI payment systems all over India have made payment transactions easier and less risky than handling cash. Even with advantages offered by new technology, there is always the risk of theft or fraud. Because of that, the government, along with the Income Tax Department puts in place measures and policies to supervise business practices and control spending.
Income Tax Guideline on Transaction Limit
A transactions cap of over Rs 2 lakh in a day is placed at the Cash Transaction Limit set in Section 269 ST of the Income Tax Act. These types of wilt breaches the rule would bring about scrutiny from the Income Tax department.
Instances Where Transactions Over Rs2 Lakh Stand Banned:
A person can not perform a cash transaction for amounts exceeding Rs2 Lakh for any other person of organization.
Permitted and split transaction amounts are both capped at Rs2 Lakh.
Remaining Income Tax rules associated with those above:
Cash transaction of stipulated amount is guided and controlled under section 40A (3) 43.
Permissive amount and conditions of transfer under cash is governed on sections 269 SS and 269 ST.
Suggestions for Staying Off the Income Tax Department Notice Radar:
To avoid receiving notices from the Income Tax Department, make sure all dealings, both cash and digital, are crystal clear and properly recorded. Keep proper bills or receipts relating to each considerable transaction namely, the purchase or sale of assets or properties. Documentation will guarantee security against complications in the future.
