The Income Tax Bill 2025 introduces significant changes to cash transaction limits in India. This video provides a comprehensive overview of the new rules, covering:

• Restrictions on cash receipts (₹2 lakh limit)
• Limits on cash expenses for businesses (₹10,000/₹35,000)
• Rules for accepting and repaying loans in cash (₹20,000 limit)  
• TDS on cash withdrawals (₹1 crore/₹3 crore)
• Regulations for cash donations
• Impact on depreciation of assets purchased in cash
• And much more!

New Cash Transaction Limits Under the Income Tax Act 2025 : The Income Tax Bill 2025 introduces various restrictions on cash transactions to promote digital payments and curb tax evasion. The relevant provisions are covered under Clause 36, Clause 186, Clause 185, and Clause 188.

1. Restrictions on Receiving Cash (Clause 186)

Here’s a table summarizing the penalties for violating section 186 of the Income-tax Bill 2025, as well as other key aspects of the clause:

• Penalty for violation: An amount equal to the sum received in cash may be levied as a penalty under Clause 446.
• “specified sum” means any sum of money receivable, whether as  advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place;

2. Restrictions on Acceptance of Cash Loan / Mode of taking or accepting
certain loans, deposits and specified sum.

Here is a breakdown of cash transaction limits according to Clause 185 of the Income Tax Bill 2025, in tabular form:

Meaning : “specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place; Clause 189(c)

Penalty : If a person takes or accepts any loan or deposit or specified sum in  contravention of the provisions of section 185, the Assessing Officer may impose on him, a penalty equal to the amount of the loan or deposit or specified sum so
taken or accepted. (clause 450)

In summary, according to Clause 185(1) read with clause 185(1)(iii) of the Income Tax Bill 2025, any person cannot accept a loan, deposit, or specified sum of ₹20,000 or more in cash. The transaction needs to happen through account payee cheque, account payee bank draft, electronic clearing system, or other prescribed electronic means [185(1), 185(1)(iii)].

3. Restrictions on Cash Payments for Business Expenses (Clause 36)

Here’s a summary in tabular form of the treatment of business expenses exceeding ₹10,000 (or ₹35,000 for specific cases) paid in cash, according to the Income-tax Bill 2025 and our conversation history:

• Note : If a business incurs an expense exceeding ₹10,000 in cash per day, the expense will be disallowed from deductions while calculating taxable income.

3.Repayment of  certain loans or deposits.

Clause 188 of the Income-tax Bill 2025, along with the penalty for its violation

Note : “specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place.

4. Cash Withdrawal Limits & TDS (Clause 393 Table)

4.Depreciation not Allowed if Asset over Rs 10000 Purchased in Cash

Exclusion from actual cost:  The payment or aggregate of payments exceeding ten thousand rupees in
a day for acquisition of an asset, made to a person in a mode otherwise than by specified banking or online mode, shall be excluded from the actual cost of the asset.  (clause 39)

“Specified Banking or Online Mode” shall mean transaction by  an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode, as prescribed; [ Clause 66(36)]

5. Other New Cash Transaction Limits Under the Income Tax Act 2025

Note

• The donation must be made as a sum of money.
• The term “charitable purpose” does not include any purpose that is wholly or substantially of a religious nature.
• To claim the deduction, the assessee’s return of income filed for any tax year must include information about the donation furnished by the institution or fund to the prescribed authority. This claim is subject to verification as per the risk management strategy formulated by the Board.

Key Takeaways for New Cash Transaction Limits Under the Income Tax Act 2025

1. Cash receipts of ₹2 lakh or more in a single transaction are prohibited.
2. Cash expenses exceeding ₹10,000 per day per person will be disallowed.
3. Loan repayments of ₹20,000 or more in cash are not allowed.
4. TDS at 2% is applicable on cash withdrawals exceeding ₹1 crore (₹3 crore for co-op societies).
5. Donations exceeding ₹2,000 must be made through digital modes.

Refer following for New Cash Transaction Limits Under the Income Tax Act 2025

• Key FAQs on the Income Tax Bill 2025
• New Income Tax Act 2025: update : Tabled In parliament on 13th Feb 2025
• Income-tax Bill, 2025 ​[!New]

whether HSN MANDATORY FOR B2C TURNOVER BELOW 5Cr?

HSN codes are not mandatory for B2C (Business-to-Consumer) supplies for businesses with an annual turnover below Rs. 5 crores.

Here’s a summary of HSN code requirements:

• Turnover above Rs. 5 crores:
  • Mandatory: Must use 6-digit HSN code for all invoices (both B2B and B2C).
• Turnover upto Rs. 5 crores:
  • B2B invoices: Must use 4-digit HSN code.
  • B2C invoices: HSN code is optional.  

    Refer NOTIFICATION NO. 78/2020 – CENTRAL TAX DATED 15-10-2020

• GST, HSN Code, B2C, B2B, Turnover, Tax Invoice, GST Rules, GST Compliance, Tax, Business, Finance, India

Business is defined in  Section 2(17) of Model GST Law but there is no definition of Profession :-

(17) “business” includes –

(a) any trade, commerce, manufacture, profession, vocation or any other similar activity, whether or not it is for a pecuniary benefit;

(b) any transaction in connection with or incidental or ancillary to (a) above;

(c) any transaction in the nature of (a) above, whether or not there is volume, frequency, continuity or regularity of such transaction;

(d) supply or acquisition of goods including capital assets and services in connection with commencement or closure of business;

(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members, as the case may be;

(f) admission, for a consideration, of persons to any premises; and

(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;

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