In our society, borrowing cash from relatives or friends during emergencies is quite common

A few days ago, my colleague Mr. Johan came to me, visibly worried. He had bought a piece of land by borrowing Tk 20 lakh in cash from one of his relatives. In his income tax return, he reported the amount as an unsecured loan. However, the tax officer in charge of the circle later issued a notice, treating the money as taxable income. Johan asked for my advice on what to do next.

Cash transactions: more than Tk 5 lakh in cash can be treated as taxable income

In our society, borrowing cash from relatives or friends during emergencies is quite common. However, many people are unaware that there is a legal limit on cash transactions—crossing this limit may lead to increased tax liabilities. According to the law, if this limit is breached, the cash amount can be treated as income from other sources and taxed accordingly.

An important exception exists: cash received from a spouse, parents, children, or siblings will not be considered taxable income, provided the transaction is clearly disclosed in the income tax returns of both parties.

This provision is included in Section 67(13) of the Income Tax Act 2023 of Bangladesh, which aims to ensure transparency in financial dealings.

Under this section, if a person receives more than Tk 5 lakh as an advance, loan, or deposit, it must be transferred through a bank or via a crossed cheque.

Otherwise, if the transaction is made in cash, the amount will be treated as taxable income. In other words, any cash transaction exceeding Tk 5 lakh outside the banking system is now directly subject to tax.

Additionally, Section 35 of Part 1 of the Sixth Schedule of the same Act states that gifts sent from abroad through banking channels do not need to be declared in the donor's income tax return.

Overall, a proper understanding of these legal provisions can help taxpayers avoid unnecessary complications or additional taxes.

The intent of the law goes beyond mere tax collection—it reflects a shift in our economic culture. For a long time, cash represented trust and reliability; the tangible feel of money served as confirmation of a transaction.

But times have changed. Today's economy is moving towards digitalisation, where the origin of funds and their transparent documentation are key.

Documented money is the backbone of a fair and accountable financial system.

That said, the law is also sympathetic to real-life situations. Transactions between close family members—such as spouses, parents, children, or siblings—are exempt, as long as they are properly declared in income tax returns.

Similarly, the rule does not apply to banks, financial institutions, NGO bureaus, or entities registered with the Microcredit Regulatory Authority, since their transactions are already systematically recorded.

The main objective of this legal provision is to ensure financial transparency, prevent tax evasion, and curb the circulation of unaccounted income.

But more importantly, it carries a broader civic message:

"If the source of money is clear, so is the responsibility attached to it."

And what about Johan's case?

As per the law, Johan accepted Tk 20 lakh in cash from a relative, exceeding the Tk 5 lakh threshold.

Since the transaction was not made through a banking channel, the entire amount was treated as income, and the tax officer issued a notice accordingly.

I had to explain to him that, under current law, he has no alternative but to pay the tax. The cash transaction limit was exceeded, and the legal consequences follow naturally.

Bangladesh is now stepping into an era of banking transparency, moving away from the informal, unrecorded flow of cash.

The Tk 5 lakh limit is not just a number—it is a symbol of financial accountability. Crossing it without documentation means stepping into the shadow of tax liability.

Because money today is more than just a transaction—it's a social statement:

"I am transparent, I am accountable."

The era of untraceable cash is fading, making way for digital transparency—the financial signature of a prosperous, just, and modern Bangladesh.