The Income Tax Department has recently released a brochure emphasising the importance of avoiding cash transactions to mitigate tax penalties. This initiative aims to educate taxpayers about the potential financial repercussions of cash dealings, which can lead to severe penalties under the Income Tax Act.

“Say No To Cash Transactions. Individuals prefer to receive, pay, and transfer cash when the amounts of transactional value (money) involved are marginal to small,” the Income Tax Department in a brochure released on January 2, 2025 said.

The brochure advises taxpayers to refrain from using cash for daily transactions, particularly those involving significant amounts. The department noted that many individuals often resort to cash payments for convenience, but this practice can lead to unintentional violations of tax regulations.