In this age of digitization, everything is happening online. From shopping to making payments, everything is done with just a click. However, many people still prefer cash for transactions.

Even though the world is moving towards digitalization. Everything from shopping to payments is becoming online, but many people still keep cash at home and use it for transactions. Now and then, news of Income Tax Department raids also surfaces. In such a situation, it's natural to wonder how much cash one can legally keep at home. Let's find out what the law says about this. 

Is there any limit on keeping cash? 

The first important question is whether there's a legal limit on the amount of cash you can keep at home. The Income Tax Department has not set any limit on the amount of cash you can keep at home. Whether the amount is small or large, keeping cash is not illegal. The only requirement is that there must be a legitimate source of income. If you can prove that the money kept at home is your salary, business income, or part of a legal transaction, you can safely keep any amount at home. Problems arise when you can't prove the source of income.

What does the Income Tax Act say? 

Sections 68 to 69B of the Income Tax Act deal with the rules relating to cash and property. 

Section 68: If any amount is recorded in your passbook and cashbook, but you are unable to explain its source, then it will be considered as unclaimed income. 

Section 69: If you have cash or any investment but are unable to account for it, it will be considered undisclosed income. 

Section 69B: If you have assets or cash in excess of your declared income but are not disclosing their source, you will be liable to tax and penalty. 

If you can't tell me the source... 

If a large amount of cash is recovered from your home during an investigation or raid and you are unable to provide a proper account of it, the entire amount will be considered undisclosed income. 

Heavy taxes may be imposed on you. 

A fine of up to 78 percent of the seized amount can be imposed.

If the department suspects tax evasion, a case can also be filed.