Cash Transaction Alert: Income Tax Cash Rules for Husband-Wife and Father-Son Deals
Insight Kashmir: Navigating Cash Transactions and Income Tax
Are cash transactions subject to income tax scrutiny? How much financial exchange is permissible within familial relations? These questions often linger in the minds of many. Insight Kashmir sheds light on these queries.
In the realm of income tax surveillance, every transaction warrants attention. Individuals often wonder if the Income Tax Department can issue notices for cash transactions. Concerned about the implications of financial exchanges within familial circles, individuals seek clarity on the matter.
Tax experts affirm that routine disbursements for household expenses or gifts between spouses do not attract income tax liability for the recipient. Such sums are construed as the husband’s income, absolving the wife from any tax obligations. However, if the wife chooses to invest these funds and generates income, taxation becomes applicable on the earnings. Notably, investment gains accrued annually are attributed to the wife’s income, necessitating tax payment.
Sections 269SS and 269T of the Income Tax Act stipulate penalties for cash transactions exceeding Rs 20,000. Nevertheless, certain exemptions prevail, particularly concerning transactions between immediate family members. Interactions such as those between father and son, or husband and wife, enjoy immunity from penalties. In essence, while the wife remains shielded from Income Tax Department notices for routine transactions, tax obligations arise if the invested funds yield income over time.
