1. Reporting and Scrutiny Triggers
- Large cash withdrawals may be reported to the tax department through SFT.
- May attract questions on:
- Business necessity.
- End-use of cash.
2. Possible Implications
- Unexplained cash withdrawals / usage may lead to additions during assessment.
- Questions on genuineness of expenses paid in cash.
3. Mitigation Steps
- Prefer digital payments wherever practical.
- For necessary cash withdrawals:
- Document purpose.
- Maintain vouchers and approvals.
- Link withdrawals to specific business needs.
