How much Cash Transaction is Allowed in Property Purchase?

There is a certain cash transaction limit for property purchase, and the government has strictly asked the citizens to abide by it. A lot of people used to purchase property using liquid cash, but that is not legal. A 100% penalty can be levied in such a case as well, so it is better to purchase a property using a debit/credit card, a check, an online transaction, or some other mode of payment. I can tell you how much cash transaction is allowed in property purchases here. 

Sorry to say, but you cannot buy a flat or any property using full cash. No real estate transaction is to take place if the cash amount exceeds Rs 20,000. As per Section 269SS of the Income Tax Act, the seller will be held guilty of taking payment of over Rs 20,000 in cash and must be prepared to pay a 100% penalty fee for it. This law is formulated by the Central Board of Direct Taxes (CBDT) and is in practice as of June 1, 2015.

Yes, you can show the cash payment as proof of transaction in the registered title deed. But make sure it does not exceed Rs. 20,000. 

So keep in mind the cash transaction limit for property purchase and invest accordingly.

According to Section 269SS of the Income Tax Act, no person can take or accept any loan or deposit above Rs. 20,000 in cash payment for purchase of property 2023. This amount is valid while transacting immovable property. 

If a person is involved in transactions in immovable properties for cash more than Rs 20,000, t

hey will be subjected to a 100 percent penalty. As part of the fine, they have to deposit the entire proceeds of the property sold to the Income Tax department.

It is important to note that cash transactions of certain types, even if the amount is lower than the set limit of Rs 2 lakh, have been banned. For instance, one is banned from using Rs 20,000 or more in cash for transfer of immovable property. I hope you got an idea of cash transaction limit for immovable property.

Cash transaction limit for property purchases is subject to legal restrictions and reporting requirements.

Here's the general framework for

restriction on cash payment for purchase of property:

1. Section 269SS and 269T of the Income Tax Act:

   These sections regulate the acceptance and repayment of loans or deposits in cash. According to Section 269SS, no person can take or accept any loan or deposit above Rs. 20,000 in cash. Likewise, Section 269T prohibits the repayment of loans or deposits above Rs. 20,000 in cash. These sections are also applied to property transactions.

2. Real Estate (Regulation and Development) Act, 2016 (RERA):

   It focuses on transparency in transactions. Cash transactions are discouraged, and transactions are expected to be paid out through banking channels.

3. Stamp Duty and Registration Fees:

   These are required to be paid in the form of a demand draft, pay order, or online transfer. Cash payments for these fees are limited or not allowed.

4. Benami Transactions (Prohibition) Act, 1988:

   It prohibits the transactions in which the property is held by one person, but the consideration or control over the property is retained by another person.

It's important to note that any

cash limit in property purchases

could attract attention from tax authorities. It can be investigated for tax evasion or other legal violations.