Cash and Gift Rules in India Under the New Income-tax Act: Cash at Home, Deposits, Gifts to Family and Wedding Cash

Search for how much cash you can keep at home and you’ll find confident numbers that don’t exist in any law. The real rules are less about how much cash you have and more about whether you can explain where it came from, how it moves, and who it came from. They also changed address this year: the Income-tax Act, 2025 replaced the 1961 Act on 1 April 2026, and the Income-tax Rules, 2026 replaced the old rules on the same day. Most articles online still quote section numbers and thresholds that no longer apply.

I’ve gone through the new Act and the new Rules for each of the four questions people actually ask. Where an old section number is what you’re likely to have heard, it’s in brackets.

How much cash can I keep at home?

There is no limit. No provision of the Income-tax Act caps the cash a person can hold. What the law cares about is the source.

If the tax department finds money, bullion, jewellery or any other valuable that isn’t recorded in your accounts and you can’t satisfactorily explain where it came from, section 104 of the 2025 Act (formerly section 69A) treats its value as your income for that year. Section 195 (formerly 115BBE) then taxes that income at a flat 60%, before surcharge and cess, with no deductions or set-off of losses allowed against it. Under the old Act, with its 25% surcharge and 4% cess, this was commonly worked out at 78%.

In practice, “explained” means a paper trail: an ATM or bank withdrawal, a salary credit, a sale of something you owned, a gift you can document, income shown in your return. ₹5 lakh of cash withdrawn from your own account and kept for a family wedding is explained. ₹5 lakh with no trail behind it is a problem at 60%, whatever the amount.

Which cash deposits does the tax department hear about?

Large ones, automatically. Banks and other institutions file a Statement of Financial Transactions every year, listing customers who crossed certain amounts. Rule 237 of the Income-tax Rules, 2026 sets those amounts, and rule 159 sets when you must quote your PAN.

Notice what is missing. First, the ₹50,000-a-day PAN rule that most articles still quote is gone; the trigger is now ₹10 lakh across the year. Second, the reporting threshold for savings accounts is halved, to ₹5 lakh, for people without a PAN, which most coverage hasn’t picked up.

Being reported isn’t a penalty. It means the deposit appears in your Annual Information Statement, and if it doesn’t match the income in your return, you can expect a question. Keeping each year’s deposits just under ₹10 lakh achieves nothing if the money itself can’t be explained; the reporting threshold is not a tax-free allowance.

Can I gift money to my spouse or parents?

Yes, any amount, tax-free for them. The catch is what happens to the income the gift earns.

Under section 92 of the 2025 Act (formerly 56(2)(x)), money received without consideration is taxable in the receiver’s hands if it exceeds ₹50,000 in a year. But gifts from a “relative” are exempt with no upper limit. The Act’s definition of relative includes your spouse, your brothers and sisters, your spouse’s brothers and sisters, your parents’ brothers and sisters, any lineal ascendant or descendant (parents, grandparents, children, grandchildren) on either side, and the spouses of all of these. Money received under a will or by inheritance is exempt under the same sub-section, a point covered in more detail in our guide on what happens to money when someone dies.

Clubbing: when the income comes back to you

Section 99 (formerly 64) adds certain income of other people to yours. Three cases matter for families:

• Your spouse: income from assets you transferred to them without adequate consideration is taxed as your income. Gift your wife ₹20 lakh and the interest on her fixed deposit is added to your income, not hers.
• Your son’s wife: the same rule applies to assets you transfer to her.
• A minor child: the child’s income is added to the income of the parent who earns more, unless it comes from the child’s own work or skill, or the child has a specified disability.

Parents aren’t on that list. Money you give your mother or father is theirs, and the income it earns is taxed in their hands, at their rate. If your parents have little other income, that can mean much less tax than if the same money stayed with you.

Two refinements are worth knowing. Clubbing applies to transfers “otherwise than for adequate consideration”, so a genuine loan to your spouse at a market rate of interest is treated differently from a gift. And these rules are about income tax; they don’t stop a gift from being a gift.

What about cash gifts at a wedding?

Tax-free for the couple, but there is a cash limit per giver. These are two separate rules, and it is the second that catches people.

Section 92(3) exempts money received “on the occasion of marriage of the individual”, from anyone, relative or not, with no ceiling. Note the wording: it is the individual getting married who benefits. Gifts handed to the parents of the bride or groom are not covered by that clause, so cash given to a parent by a friend or colleague can be taxable in the parent’s hands if it pushes their gifts from non-relatives above ₹50,000 for the year.

Separately, section 186 (formerly 269ST) says no one may receive ₹2 lakh or more in cash from a single person in a day, for a single transaction, or “in respect of transactions relating to one event or occasion from a person”. A wedding is an occasion. Under section 451, the penalty is equal to the amount received, and it falls on the person who receives the cash, not the one who gives it.

Cash loans have their own, lower limit. Section 185 (formerly 269SS) bars taking or accepting a loan or deposit of ₹20,000 or more in cash, with a penalty equal to the amount under section 450. Borrowing ₹50,000 in cash from a friend for wedding expenses is exactly what it targets.

The short version, in rupees

• Cash at home: no limit; unexplained cash is taxed at 60% plus surcharge and cess.
• Savings account cash deposits: reported at ₹10 lakh a year with PAN, ₹5 lakh without.
• Receiving cash: under ₹2 lakh per person per day, transaction or occasion.
• Cash loans: under ₹20,000.
• Gifts from relatives, on your own marriage, or by inheritance: tax-free, any amount.
• Gifts from anyone else: tax-free up to ₹50,000 in a year in total.
• Gifts to a spouse: tax-free, but the income is added to yours. Gifts to parents: not clubbed.

If you are dealing with large amounts, keep the trail: bank transfers rather than cash, and a simple gift letter for anything significant between family members. It costs nothing at the time and answers most questions before they are asked.