Can you receive ₹2 lakh in cash in one day? Here’s what the income tax rules say

Do you know that the income tax department closely tracks large cash transactions? And violating cash limits can lead to heavy penalties. One key provision to be aware of is Section 269ST of the Income Tax Act, which restricts the amount of cash an individual or entity can receive.

What does Section 269ST say?

Under Section 269ST, no person is allowed to receive ₹2 lakh or more in cash:

• From a single person in one day,

• For a single transaction, or

• For multiple transactions connected to a single event or occasion.

Importantly, the responsibility for compliance lies with the person receiving the cash, not the one making the payment. This means if you’re accepting cash above the permitted limit, you could be held accountable, even if the payer acted in good faith.

Penalty for violating Section 269ST

If a person receives cash in excess of the ₹2 lakh limit in violation of Section 269ST, they may face a penalty equal to the amount received. In other words, if you accept ₹2 lakh or more in cash from a single person in one day, or for a single transaction or occasion, the entire amount received could be levied as a fine.

For example, if you receive ₹3 lakh in cash for a property deal or a business transaction, you could be fined ₹3 lakh by the tax department upon detection. This rule applies to all types of recipients.

Tax and legal experts caution that even casual or personal transactions could fall under scrutiny.

Mumbai-based tax advisor Balwant Jain added, “There’s no penalty on the person making the payment. However, the recipient risks being penalised up to the entire amount received in cash.”

Yes, certain transactions are exempt from Section 269ST, including:

• Receipts by banking companies, post offices, or

• Government bodies acting in an official capacity.

If you are planning to receive a large payment, make sure it happens through banking channels like cheque, demand draft, or digital methods (NEFT, RTGS, UPI).