Cash Transaction Limits under Income Tax Act

Not all cash transactions are allowed — cross certain limits and you may face penalty up to 100% of the amount!

Here’s a quick guide

1. Cash Receipt Limit – ₹2,00,000 (Sec 269ST)
You cannot receive ₹2 lakh or more in cash:

• From one person in a day
• For a single transaction
• For transactions relating to one event/occasion
• ✅ Must be through cheque, draft, or digital mode.

2. ⚠️ Penalty (Sec 271DA):
If you receive ₹2 lakh or more in cash in violation of Sec 269ST →
Penalty = 100% of the cash received

3.  Cash Loan/Deposit Limit – ₹20,000 (Sec 269SS & 269T)
You can’t:
Take or accept a loan/deposit in cash > ₹20,000
Repay loan/deposit in cash > ₹20,000
✅ Must be via account payee cheque, draft, or electronic mode.

4. ⚖️ Penalty (Sec 271D & 271E):
Violation = Penalty equal to the loan/deposit amount
e.g. Accept ₹50,000 in cash → Penalty ₹50,000

5. Property Transactions – ₹20,000 Limit
No person can accept ₹20,000 or more in cash for:
➡️Sale of immovable property
➡️Advance or consideration
Always use banking channels.

6.Donations & Expenses in Cash:

• 80G donations above ₹2,000 not eligible for deduction.
• Business expense in cash > ₹10,000 per day (per person) not allowed as deduction (Sec 40A(3)).

7. Takeaway:
Avoid large cash dealings.
Use banking channels — safe, traceable & tax-compliant.
Cash may look easy, but penalties are costly! 