Section 269ST — Cash Transaction Limit ₹2 Lakh

Q: What is Section 269ST and what is the cash receipt limit?

Section 269ST prohibits any person from receiving cash (or specified instrument equivalent) of ₹2,00,000 or more from a single person in a single day. Effective from: 1 April 2017 (Finance Act 2017). Covers: (a) ₹2L or more in a single transaction; (b) ₹2L or more in aggregate from a single person in a day; (c) ₹2L or more for a single event or occasion. The penalty is on the RECEIVER — not the payer. Penalty (Section 271DA): 100% of the amount received in violation. Example: A property dealer receiving ₹5L cash from a single buyer in one day → violates 269ST → penalty ₹5L.

Q: What are the key exemptions from Section 269ST?

Exemptions from Section 269ST: (1) Cash received by the Central/State Government; (2) Banks (scheduled/co-operative), post offices, NBFCs in prescribed transactions; (3) Receipts that are covered by Section 269T (which deals with repayment of loans/deposits — covered separately); (4) Rule 6ABBA exemptions: include healthcare receipts — when a hospital/nursing home receives cash from a patient, it is exempt; (5) Receipts of business correspondence — certain agricultural/rural transactions. Note: Cash received from customers by companies, individuals, businesses for goods/services is generally covered. Wedding gifts received in cash from a single individual ≥ ₹2L in a day — also covered.

Q: Does Section 269ST apply to individual transactions or daily aggregate?

Section 269ST covers THREE scenarios — all three are independently covered: (1) Single transaction ≥ ₹2L from one person: even one cash receipt of ₹2L from one person violates. (2) Aggregate in a day ≥ ₹2L from the same person: if you receive ₹1.5L cash from person A in the morning and ₹0.7L from the same person in the evening = ₹2.2L aggregate in a day → violation. (3) Related to a single event/occasion: even if payments are spread over days, if total cash for one event (e.g., wedding catering) ≥ ₹2L, it is covered. Banks and cheque/RTGS/NEFT payments are NOT covered by 269ST — only cash receipts. Multiple persons paying separately for the same property: counted per person, not combined.

Q: What is the difference between Section 40A(3) and Section 269ST?

Section 40A(3) vs Section 269ST: Section 40A(3): Targets the PAYER; if a business pays >₹10,000 cash to a single person in a day for a business expense → that expense is DISALLOWED as a deduction. It is an indirect penalty on the payer by removing the deduction. Section 269ST: Targets the RECEIVER; any person who RECEIVES ₹2L or more in cash from a single person in a day → 100% penalty on the receiver (Section 271DA). Both sections aim to discourage large cash transactions but from different ends: 40A(3) disincentivizes paying; 269ST disincentivizes receiving cash. Both can apply to the same transaction simultaneously (payer loses deduction; receiver gets penalty).

Updated: 3 June 2026 | Income-tax Act 2025 | Effective April 2017 | Penalty 100%

Section 269ST: No person can receive cash of ₹2 lakh or more from a single person in a single day, in a single transaction, or for a single event/occasion. Penalty: 100% of the amount received (Section 271DA). Healthcare, banks, and government receipts are exempt. Applies since April 1, 2017.

100%

Penalty on the RECEIVER — 100% of the cash received above ₹2 lakh (Section 271DA).
Payer also faces risk under Section 40A(3) if it is a business payment. Always insist on digital payments for ₹2L+ transactions.

Section 269ST — Scenarios Covered vs Exempt

Scenario	Covered by 269ST?	Consequence
Receiving ₹3L cash from client for services	Yes	100% penalty on receiver = ₹3L
₹1.2L in morning + ₹1L in evening from same person = ₹2.2L	Yes — aggregate	100% penalty on ₹2.2L
Property seller receiving ₹10L cash from buyer	Yes	100% penalty = ₹10L on seller
Wedding caterer receiving ₹4L cash for wedding event	Yes — single occasion	100% penalty = ₹4L
Hospital receiving ₹3L cash from patient	No — Rule 6ABBA exemption	Exempt (healthcare)
Bank receiving large cash deposit	No — bank exempt	Exempt
Cheque/NEFT/RTGS payment of ₹5L	No — only cash covered	Not applicable
Receiving ₹1.9L cash from each of 3 different persons	No — per-person limit	Each person < ₹2L, no violation

Frequently Asked Questions

What is Section 269ST and what is the cash receipt limit?

Section 269ST prohibits any person from receiving cash (or specified instrument equivalent) of ₹2,00,000 or more from a single person in a single day. Effective from: 1 April 2017 (Finance Act 2017). Covers: (a) ₹2L or more in a single transaction; (b) ₹2L or more in aggregate from a single person in a day; (c) ₹2L or more for a single event or occasion. The penalty is on the RECEIVER — not the payer. Penalty (Section 271DA): 100% of the amount received in violation. Example: A property dealer receiving ₹5L cash from a single buyer in one day → violates 269ST → penalty ₹5L.

What are the key exemptions from Section 269ST?

Exemptions from Section 269ST: (1) Cash received by the Central/State Government; (2) Banks (scheduled/co-operative), post offices, NBFCs in prescribed transactions; (3) Receipts that are covered by Section 269T (which deals with repayment of loans/deposits — covered separately); (4) Rule 6ABBA exemptions: include healthcare receipts — when a hospital/nursing home receives cash from a patient, it is exempt; (5) Receipts of business correspondence — certain agricultural/rural transactions. Note: Cash received from customers by companies, individuals, businesses for goods/services is generally covered. Wedding gifts received in cash from a single individual ≥ ₹2L in a day — also covered.

Does Section 269ST apply to individual transactions or daily aggregate?

Section 269ST covers THREE scenarios — all three are independently covered: (1) Single transaction ≥ ₹2L from one person: even one cash receipt of ₹2L from one person violates. (2) Aggregate in a day ≥ ₹2L from the same person: if you receive ₹1.5L cash from person A in the morning and ₹0.7L from the same person in the evening = ₹2.2L aggregate in a day → violation. (3) Related to a single event/occasion: even if payments are spread over days, if total cash for one event (e.g., wedding catering) ≥ ₹2L, it is covered. Banks and cheque/RTGS/NEFT payments are NOT covered by 269ST — only cash receipts. Multiple persons paying separately for the same property: counted per person, not combined.

What is the difference between Section 40A(3) and Section 269ST?

Section 40A(3) vs Section 269ST: Section 40A(3): Targets the PAYER; if a business pays >₹10,000 cash to a single person in a day for a business expense → that expense is DISALLOWED as a deduction. It is an indirect penalty on the payer by removing the deduction. Section 269ST: Targets the RECEIVER; any person who RECEIVES ₹2L or more in cash from a single person in a day → 100% penalty on the receiver (Section 271DA). Both sections aim to discourage large cash transactions but from different ends: 40A(3) disincentivizes paying; 269ST disincentivizes receiving cash. Both can apply to the same transaction simultaneously (payer loses deduction; receiver gets penalty).

How does Section 269ST apply to real estate and property transactions?

Real estate and Section 269ST: A property buyer paying ₹5L cash to seller in a day: buyer does not violate 269ST directly (buyer is the payer — only 40A(3) applies if it is a business expense). The SELLER receiving ₹5L cash violates 269ST → penalty ₹5L on seller. Even if buyer pays ₹1.9L per day over 4 days (total ₹7.6L): each day is under ₹2L → no daily violation. BUT if the payments relate to a single event (property purchase), aggregated over the event → may be covered under the third limb of 269ST. Safe practice in real estate: always insist on cheque/RTGS/NEFT for property transactions. Additional: Section 269SS covers receiving loans/deposits in cash >₹20,000 — separate provision.

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Section 269ST — Cash Transaction Limit ₹2 Lakh

Section 269ST — Scenarios Covered vs Exempt

Frequently Asked Questions

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