India’s income-tax rules around cash transactions are becoming stricter, and tax experts say many taxpayers still misunderstand when a cash deposit, withdrawal or receipt can invite punitive tax.

According to CA Shefali Mundra, Tax Expert at ClearTax, the biggest risks arise when a person cannot prove the source of cash or when they receive money in cash beyond statutory limits—both situations that can lead to steep tax outgo or even a 100% penalty.

When the 84% tax actually applies on unexplained money

Mundra explained that the widely discussed “84% tax” applies only in specific situations where cash or other assets are categorised as unexplained income. This happens under Sections 68, 69, 69A, 69B, and the income is then taxed under Section 115BBE, with an added penalty under Section

See Full Page