Cash payment limit in property in India: Whether you want to buy or sell property, you should know the rules of cash transactions. Modi government has made strict rules regarding the use of cash in property deals, if not followed, you may get into trouble.
Cash payment limit in property in India: If you are going to buy a property or you have to sell your property, then it would be better to know all the rules regarding the transaction. Buying and selling of property is a big amount of work. In such a situation, many times 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 rules for this too and if you cross this limit of transaction in cash, then you can 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 Section 269SS, 269T, 271D and 271E of the Income Tax Act in 2015. Out of these, the change made in 269SS is very important, which talks about the penalty in such a situation. The government did this with the intention of stopping black money. In fact, after a transaction is made in cash, it becomes difficult to ascertain whether the cash has been earned legally or illegally.
Under section 269SS, if a person accepts Rs 20,000 or more in cash for selling land (even if it is being purchased for farming), house or any other kind of immovable property, then a penalty of 100 percent will be imposed on him. Let us try to understand this with the example given below.
What does 100 percent penalty mean?
Under Section 269SS of the Income Tax Act, if a person is taking Rs 20,000 or more in cash while selling a property, then the entire amount will have to be paid as a penalty. That means whether you have taken Rs 50,000 or Rs 1 lakh, the entire amount will go to the Income Tax Department as a penalty.
The story does not end here
Another section 269T of the Income Tax acts as salt to the wound. Suppose the deal is canceled for some reason. If the buyer asks for the money back in cash from the property dealer or seller, then once again a penalty will be imposed. If an amount of Rs 20,000 or more is returned in cash, then like 269SS, the entire amount will go into penalty. However, this law does not apply to the government, government company, banking company or a specific person and institution identified by the central government.
How to transact
You can transact up to Rs 19,999 in a property deal in cash. This will be reflected in your registry. You can transact the amount above this through cheque or electronic transaction (internet banking). Keep in mind that registrars usually do not cancel the registry due to cash transactions for property. They will register but will send the cash related data to the Income Tax Department. After this, you may get into trouble.
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