Cash transaction rules 2025

 

Section 269ST of the Indian Income Tax Act prohibits receiving ₹2,00,000 or more in cash in a single day, from a single person, or for a single transaction. Violating this rule can attract a penalty equal to the amount received.

📌 Key Provisions of Section 269ST

  • Introduced: Finance Act, 2017 to curb black money and promote digital transactions.

  • Cash Receipt Limit:
    You cannot receive ₹2,00,000 or more in cash:

    1. From one person in a single day (even if through multiple transactions).
    2. For a single transaction (even if split into smaller payments).
    3. For transactions relating to one event/occasion (e.g., marriage expenses, property purchase).

  • Mode Allowed: Payments above this limit must be received via account payee cheque, account payee bank draft, or electronic transfer (NEFT/RTGS/UPI, etc.).

🚨 Penalty for Violation

  • Penalty under Section 271DA: Equal to the amount of cash received in violation.
    • Example: If ₹5,00,000 is received in cash for a property deal, penalty = ₹5,00,000.

✅ Exceptions

Section 269ST does not apply to:

  • Government, banks, post offices, and certain notified institutions.
  • Transactions where cash is withdrawn from banks/ATMs (cash withdrawal is not restricted).

Practical Examples

  • Gift to Daughter: If you gift ₹3,00,000 in cash to your unmarried daughter, it violates Section 269ST. Instead, transfer via bank.
  • Property Sale: Receiving ₹2,50,000 in cash from a buyer is prohibited. Must be through banking channels.
  • Marriage Expenses: Collecting cash gifts exceeding ₹2,00,000 from relatives/friends for marriage can trigger penalty.

Risks & Compliance Tips

  • Avoid large cash dealings; always use banking channels.
  • Maintain documentation (gift deeds, bank transfer records) for transparency.
  • Be cautious with community events or personal occasions where multiple cash gifts may aggregate beyond the limit.

Examples under Section 269ST

You cannot receive ₹2,00,000 or more in cash:

  1. From one person in a single day

  2. For a single transaction

  3. For transactions relating to one event/occasion

✅ Scenario

  • You want to receive ₹2 lakh each from two different persons on the same day (total ₹4 lakh).

  • Since the limit applies per person per day, receiving ₹2 lakh from Person A and ₹2 lakh from Person B is allowed.

  • However, if either person gave you ₹2,00,001 or more in cash, it would violate Section 269ST.

⚠️ Important Caveats

  • If the two payments are for the same transaction/event (say, a property deal or marriage function), then the aggregate cash received for that transaction/event must also not exceed ₹2 lakh.

  • Example: If both persons are contributing cash towards the same property purchase, then receiving ₹4 lakh in cash would violate Section 269ST, even though individually they gave ₹2 lakh.

  • If they are independent gifts or unrelated transactions, then it is permissible.

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