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]

Press conference on Digital Payments: CEO, Niti Aayog, Shri Amitabh Kant

NITI Aayog announces the launch of the schemes Lucky Grahak Yojana and the Digi-धन Vyapar Yojana to give cash awards to consumers and merchants who utilize digital payment instruments for personal consumption expenditures. The scheme specially focuses on bringing the poor, lower middle class and small businesses into the digital payment fold. It has been decided that National Payment Corporation of India (NPCI) shall be the implementing agency for this scheme.  It would be useful to reiterate that NPCI is a not for profit company which is charged with a responsibility of guiding India towards being a cashless society.

The primary aim of these schemes is to incentivize digital transactions so that electronic payments are adopted by all sections of the society, especially the poor and the middle class. It has been designed keeping in mind all sections of the society and their usage patterns. For instance, the poorest of poor will be eligible for rewards by using USSD. People in village and rural areas can participate in this scheme through AEPS. The scheme will become operational with the first draw on 25^th December, 2016 (as a Christmas gift to the nation) leading up to a Mega Draw on Babasaheb Ambedkar Jayanti on 14^th April 2017. It will comprise of two major components, one for the Consumers and the other for the Merchants:

a) Lucky Grahak Yojana [Consumers]: 

i) Daily reward of Rs 1000 to be given to 15,000 lucky Consumers for a period of 100 days;

ii) Weekly  prizes worth Rs 1 lakh, Rs 10,000 and Rs. 5000 for Consumers who use the alternate modes of digital Payments

This will include all forms of transactions viz. UPI, USSD, AEPS and RuPay Cards but will for the time being exclude transactions through Private Credit Cards and Digital Wallets.

b) Digi-धन Vyapar Yojana[ Merchants]:

i) Prizes for Merchants for all digital transactions conducted at Merchant establishments

iii) Weekly  prizes worth Rs. 50,000, Rs 5,000 and Rs. 2,500

c) Mega Draw on 14th of April – Ambedkar Jayanti

a) 3 Mega Prizes for consumers worth Rs 1 cr, 50 lakh, 25 lakh for digital transactions between 8^th November, 2016 to 13^th April, 2017 to be announced on 14^th April, 2017

b) 3 Mega Prizes for merchants worth Rs 50 lakhs, 25 lakh, 12 lakh for digital transactions between 8^th November, 2016 to 13th April, 2017 to be announced on 14th

To ensure that the focus of the scheme is on small transactions (entered into by common people), incentives shall be restricted to transactions within the range of Rs 50 and Rs 3000. All transactions between consumers and merchants; consumers and government agencies and all AEPS transactions will be considered for the incentive scheme.

The winners shall be identified through a random draw of the eligible Transaction IDs [which are generated automatically as soon as the transaction is completed] by software to be especially developed by NPCI for this purpose.  NPCI has been directed to ensure a technical and security audit of the same to ensure that the technical integrity of the process is maintained.

The estimated expenditure on the first phase of the scheme (up to 14^th April 2017) is likely to be 340 Crores . The Government will simultaneously carry out a review for further implementation. India is transitioning at a rapid rate from a cash-user society to a cashless society. This is a historic moment in our nation’s history when our nation is shedding old habits and rapidly adopting new means which shall propel us into a truly modern age.

1. E wallet mode to make Digital Payment

   Read SBI Buddy Mobile App – How to use to make payments- explained

2. UPI mode to make Digital Payment  through smartphone Mobile phones

Read How to do Cashless Transactions -SBI Pay App- Payment without cash

4. *99# Service on Mobile (without / with Smartphone)  to make Digital Payment

Read  *99# Service – All you wanted to Know – Mobile Banking

5. Aadhaar Enabled mode to make Digital Payment

5. Debit Cards / Credit Cards /Point of Sale  Machines to make Digital Payment

With a view to provide logistic support to the IEC activities- information, education and communication, holding camps for transiting to the digital mode of payment, the Government has undertaken a series of measures to provide incentives to the district administration which will give a boost to cashless digital payment systems across the districts, talukas and panchayats.   NITI Aayog has enlisted a series of incentives for the communication campaign for the district authorities and administration to promote the transition to the cashless digital payment systems.

These include incentives for digital payments for day to day financial transactions like buying or selling goods/services, transferring money etc.

NITI Aayog will provide logistic support for outreach activities at the district, taluk and panchayat level in form of the seed money of Rs.5lakh per district administration as a part of the communication campaign. The purpose is to enhance the seeding of Mobile and Aadhar numbers to the bank account, issue of Rupay cards wherever necessary, issue of PIN wherever necessary, downloading of app wherever necessary and finally achieving two successful transactions.

The top ten best performing districts will be awarded the Digital Payment Champions of India award.

The first 50 Panchayats which go cashless will be awarded Digital Payment Award of Honour

The five digital payment systems are –

1.Unified Payment Interface, UPI

2.USSD (*99#banking)

3.Adhar Enabled Systems

4.Wallets &

5.Rupay/Debit/Credit/Prepaid Cards

The Hindi/English version of the brochure which gives step by step approach to each of the five options is available on the website- www.niti.gov.in/conetent/digital-payments . In order to help spread the message of advantages of digital payment systems , NITI Aayog has collated and put up the entire sets of creative material – presentations/posters./FM radio spots/ films on its website dedicated to the digital payments-www.niti.gov.in/conetent/digital-payments.

In addition, Common Service Networks are being mobilized to enlist the support of people and the merchants in going cashless. Ministry of Electronics and Information Technology has announced cash incentive of Rs.100 for every merchant enabled to transact digitally. Two resource persons have been provided in each district collectorate to co-ordinate the CSE in each district.

NITI Aayog has also solicited the views of the districts in terms of the challenges being faced by them, the solutions thereof and the manner in which they can be supported. It has lauded the efforts made by the district authorities in designing innovative Campaigns to help spread digital payments in their respective districts and urged upon them tp share and document the best practices. It will go a long way towards ushering in an era of transparency and good governance for a corruption free India envisaged by the Prime Minister Shri Narendra Modi. .

STEP BY STEP INSTRUCTIONS FOR VARIOUS MODES OF PAYMENT:

Cards, USSD, AEPS, UPI, Wallets