Cash payment limit in property in India: Whether to buy or sell property, you should know the rules of cash transaction. Modi government has made strict rules regarding the use of cash in property deals, if not followed then you can get into trouble. Let us know about it in detail.
If you are going to buy property or want to sell your property, then it would be better to know the complete rules regarding the transaction. Buying and selling property is a big investment. In such a situation, sometimes the other person also offers to transact in cash. It is not that you can pay the entire price of the property in cash. There are proper rules for this too and if you cross this limit of cash transactions then you may also get an income tax notice.
No matter how much the deal is, you cannot take more than Rs 19,999 in cash. For this, changes were made in sections 269SS, 269T, 271D and 271E of the Income Tax Act in 2015. Out of this, the change made in 269SS is very important which talks about penalty in such a situation. The government did this with the intention of curbing black money. In fact, after a cash transaction, it becomes difficult to ascertain whether the cash has been earned legitimately or illegally.
Under Section 269SS, if a person takes an amount of Rs 20,000 or more in cash for selling land (even if it is being taken for farming), house or other immovable property, then a fine of 100 percent will be imposed on him. It will take. Let us try to understand this from the example given below.
What is the meaning of 100 percent fine?
Under Section 269SS of the Income Tax Act, if a person is taking an amount of Rs 20,000 or more in cash while selling a property, then the entire amount will have to be paid as compensation. Meaning, whether you have taken Rs 50,000 or Rs 1 lakh, the entire amount will go to the Income Tax Department as penalty.
The story doesn’t end here
Another section 269T of Income Tax adds insult to injury. Suppose the deal gets canceled for some reason. If the buyer asks for the money back in cash from the property dealer or seller, a penalty will be imposed once again. If an amount of Rs 20,000 or more is returned in cash, then like 269SS, the entire amount will go towards penalty. However, this law does not apply to the government, government company, banking company or specific individuals and institutions identified by the central government.
How to transact
You can do cash transactions up to Rs 19999 in property deals. This will appear in your registry. You can pay the amount above this through check or electronic transaction (Internet Banking). Keep in mind that registrars generally do not cancel property registration due to cash transactions. They will do the registration but will send the cash related data to the Income Tax Department. After this, trouble may arise for you.
