Need understanding on limit 2 Lakh

Tax queries 493 views 3 replies

spatel

Engineer

68 Points Joined June 2023

There is limit of 2 Lakh for transaction in one day and It specially mention cash transaction. Most of the term over there are complex to understand.

What is considered as Cash transaction ?
- Is payment through debit card or credit card ?
- Is payment through online banking ?
- Is payment through cheque ?
- Or cash payment means payment with physical money ( currency note)
Now a days if some one needs to purchase a car or purchase a good computer and some cases some course fees seems to be costly and required payment that may exceed above limit.
There are some videos and some blog but it did not clearly mention anything and it goes in direction of different suggestion instead of giving clarity.

Replies (3)

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

208190 Points Joined July 2016

Cash payment means ONLY payment with physical money ( currency note)

All other banking mode transactions like online, cards, UPI, cheques etc., have no such limit criteria.

spatel

Engineer

68 Points Joined June 2023

Thanks Dhirajlal for your response.

This means that if person pay more then 2 Lakh using online mode of payment ( or say Electronic clearning mechanism) , is that fine ?

I can ask one more over here but not related to cash but some what in same direction about limit.

Like there is 10 Lakh limit for FD one can create in financial year. What if person is earning and not created FD for years and there is some accumulated saving (all from valid source). In that case too 10 Lakh limit is there ?

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

208190 Points Joined July 2016

No issue for any amount transferred through ECS.
The bank will report to ITD as it is rule but ITD would not penalize if you can explain its source. (generally not asked unless high value transaction)