Tax warning: Income Tax Department warns people not to do these transactions

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In a bid to implement the government’s mission to make India a cashless or less cash country and weed out corruption, the Income Tax Department has again warned people to refrain from large cash transactions, contravention of which may result in the levy of penalty or disallowance of tax deductions.



Following are the five transactions that Income Tax Department doesn’t want you to do.

  1. Don’t accept cash of Rs 2,00,000 or more in aggregate from a single person in a day or for one or more transactions relating to one event or occasion. Instead of cash, you are advised to use an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account for such transactions. However, the said restriction shall not apply to government, any banking company, post office savings bank, co-operative bank or a person notified by the Central Government. Section 271DA of the Income Tax Act provides for levy of penalty on a person who receives a sum in contravention of the provisions of section 269ST. The penalty shall be equal to the amount of such receipt. However, the penalty shall not be levied if the person proves that there were good and sufficient reasons for such contravention.


  2. Don’t receive or repay specified sum exceeding Rs 20,000 or more in cash for transfer of immovable property and use account payee cheque or account payee demand draft or use of electricity clearing system through a bank account. “Specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. Contravention of the provisions of section 269SS will attract penalty under section 271D. Penalty under section 271D shall be levied of an amount equal to loan or deposit taken or accepted.
  3. Don’t pay more than Rs 10,000 in cash relating to expenditure of business/profession. If such expenses exceeding Rs 10,000 are made in any mode, other than by an account payee cheque drawn on a bank, or account payee bank draft, or use of electronic clearing system through a bank account, no deduction shall be allowed in respect of such expenditure in the profit and loss account.


  4. Don’t donate in excess of Rs 2,000 in cash to a registered trust or political party. Not only you won’t be able to claim deductions under section 80G of the Income Tax Act for such donations, but appropriate actions would be initiated against the trust or political party for encouraging money laundering.
  5. Don’t pay health insurance premiums in cash. If you make any payment in cash on account of premium on health insurance facilities, you won’t get deductions under Section 80D of the Income Tax Act.

So, it is advisable for your own good not to violate the above rules, as the Income Tax Department is seeking information regarding such violations, black money or benami transactions.

19 COMMENTS

  1. Good move,it implies only on common citizen, plilticians big sharks are still above all.Firstly control from the higher level.Corruption always flows from the top to bottom.EYE WASH>

  2. Instead of all these bribes charging tax on bank transaction when it credits into the account is good idea to avoid all false proofs what people and auditors and income tax people r doing now days is best. Withdrawal of cash from bank or atm should charge more tax. So no bribe no action

  3. Good efforts are being made by you. Pl. always be guided all of us the easiest way to file income tax return in ITR 1 .

  4. This is a very good move… Request to the government is to take complaints on bribery more seriously. Even today Property registration or 7/12 transfers cannot be done without paying a bribe. The Government Employees clearly tell you, that unless you pay up the transaction will not be done. They make you visit the office multiple time… Indirectly a harassment because you chose not to pay. Tried complaining to the Government on the portal but absolutely no action was taken. Eventually, had no choice but to settle the bribe in CASH CASH CASH…. This happened in 2018. The improvement that I see is that they do it very discreetly, unlike in the past when it was the norm and they could do so openly.

  5. some of retailers don’t accept payment through Debit card .They ask for 2% extra if paid through debit card or demand cash payment .any control over them?

  6. very good move to weed out black money generation. but the problem in India is poor banking services —ex. unwanted transactions charges , too many bank holidays , literacy in rural sector , ignorance about operating/procedure of banking.

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