The new cash transaction rules established by the government aim to regulate the flow and storage of cash within households and transactions, primarily to curb the circulation of black money and ensure transparency in financial dealings.

Firstly, there isn’t a fixed limit on the amount of cash one can have at home. However, the key aspect is that the cash should be accounted for and sourced from legitimate earnings. If you can justify the source of the cash during an income tax scrutiny, then keeping a substantial amount of cash at home isn’t illegal. But if you fail to provide proof of its lawful origin, it might lead to legal consequences.


Consider an instance where during an income tax raid at your place, unexplained cash is found, and you’re unable to substantiate its legitimacy. In such cases, the income tax authorities hold the right to seize the unexplained cash and potentially impose a fine that could go up to 137 percent of the unaccounted amount.

To regulate cash transactions more comprehensively, several rules have been implemented.

Key Points to Remember

Engaging in cash transactions exceeding Rs 20 lakh in a financial year can incur penalties.

Providing the PAN number is mandatory for cash deposits or withdrawals over Rs 50,000 at once.


If a person deposits Rs 20 lakh in cash within a year, they need to provide PAN (Permanent Account Number) and Aadhaar details.

Failure to provide PAN and Aadhaar information for deposits exceeding Rs 20 lakh may result in fines up to Rs 20 lakh.

Cash purchases over Rs 2 lakh are not permissible.


For cash purchases exceeding Rs 2 lakh, a copy of the PAN and Aadhaar card is required.

Transactions involving the sale or purchase of property worth over Rs 30 lakh in cash might attract scrutiny from investigative agencies.

Payments exceeding Rs 1 lakh via credit or debit cards may undergo scrutiny.

Cash withdrawals exceeding Rs 2 lakh per day from relatives require banking channels.

A limit of Rs 2,000 is set for cash donations.


No individual can borrow more than Rs 20,000 in cash from another person.

If you withdraw more than Rs 2 crore in cash from the bank, you need to provide a TDS certificate.

These regulations don’t necessarily imply that having a significant amount of cash at home is illicit. However, they aim to ensure that cash transactions are transparent, accountable, and comply with tax regulations. The rules serve to discourage unaccounted cash flow and encourage the use of banking channels, promoting a more formal and traceable financial system.