How Much Cash Can You Keep at Home in 2025? Limits, Penalties, and Income Tax Guidelines
Many people prefer keeping some cash at home for emergencies, but it’s essential to understand what’s legally allowed under Indian income tax laws. As of 2025, there is no fixed limit on how much cash an individual can keep at home, but every rupee must be accounted for with proper income records. If the Income Tax Department finds unaccounted cash during a raid, it can be seized, and heavy penalties—up to 77% of the unexplained amount—may apply. It’s also advisable to keep large transactions digital or well-documented to avoid scrutiny.
No Fixed Cash Holding Limit
Indian Income Tax laws do not restrict cash holding at home. However, it is essential that the cash is generated from a legitimate source, and you have provided a disclosure regarding it.
Section 269ST - Cash Receipt Limit
If a person/entity pays more than ₹2 lakh in cash to you in one day, you have received that amount in violation of Section 269ST of the Income Tax Act. You could be subject to a penalty of 100% under the Income Tax Act for any such cash reception.
Cash Transaction Limits
If you have received a loan or deposited more than ₹20,000 in cash, it would be considered a transaction which is prohibited by Section 269SS of the Income Tax Act, thereby inviting a penalty equal to the amount you deposited or obtained as a loan.
Income Tax Scrutiny on Cash
If you have undisclosed cash at home, this can lead to Income Tax Order scrutiny, where you would have to provide evidence of cash received from any legal source. Otherwise, the Income Tax Department will just double your income.
TDS on Cash Withdrawals
If you withdraw cash that is greater than ₹1 Crore from a bank in a financial year, this will trigger TDS of and if not paid then there would be a penal interest of 1% (penalty) as well.
Best Practices for Compliance
Keep receipts for your cash, report any income received, use digital means often, and avoid large cash transactions. These would work to mitigate tax risks associated with cash and penalties.
Disclaimer
The information provided in this article is for educational and informational purposes only. Rules and penalties are subject to change based on updates from the Income Tax Department of India. Readers are advised to consult a certified tax professional or financial advisor for personalized guidance.
