Can you accept ₹2 lakh cash in a day? Know the Income-Tax rules — or face steep penalties
In India, cash transactions still happen frequently despite the push for digital payments. But before you accept or hand over large sums in cash, it’s essential to know the law. Under Section 269ST of the Income-tax Act, a recipient cannot accept ₹2,00,000 or more in cash from a single person in one day, in a single transaction, or for transactions related to the same event or occasion. Violating this rule can attract a penalty equal to the amount received — so ignorance can be expensive. Income Tax India
What exactly does the rule say?
Section 269ST prohibits receiving cash of ₹2,00,000 or more:
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From the same person in aggregate in a single day, or
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In a single transaction, or
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For transactions related to a single event or occasion.
Such receipts must be made through non-cash channels — e.g., account-payee cheque, bank draft, NEFT/RTGS, or other prescribed electronic modes. The official Income-Tax materials and tutorials explicitly explain this restriction. Income Tax India
Who is responsible — payer or receiver?
The legal burden lies on the recipient (the person who accepts cash), not on the payer. That means if you accept more than ₹2 lakh in cash from one person for a sale, service, or any transaction, you risk being held liable for the violation — even if the payer insisted on giving cash. Tax professionals have reiterated this point in recent guidance. ClearTax
How big is the penalty?
If Section 269ST is breached, the tax authorities can impose a penalty equal to the amount received in cash that contravenes the provision. For example, if you accept ₹3 lakh in cash for a property sale or business deal from one person in a day, you could be penalised ₹3 lakh. Courts and advisory bodies have flagged that even personal or one-off transactions may come under scrutiny. Upstox - Online Stock and Share Trading+1
Important exceptions and related sections
There are exceptions and related rules to keep in mind:
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Government receipts, local authorities, banks and post offices are generally exempt from Section 269ST.
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The cash receipt limit does not apply to withdrawals from your own bank or post office account (though banks have their own operational limits).
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Related provisions such as Section 269SS (cash loans/deposits limit of ₹20,000) and other penalty sections may also apply in different contexts. Always check the full rules before assuming an exemption. www.bajajfinserv.in+1
Practical tips — how to accept large payments safely
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Use banking channels: Ask for payment by account-payee cheque, bank transfer (NEFT/RTGS/IMPS), UPI, or demand draft. These are compliant and leave an audit trail. Income Tax India
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Avoid “splitting” from the same person: Splitting a single amount into multiple small cash receipts from the same payer on the same day still counts as aggregate receipt — don’t try to bypass the rule. taxroutine.com
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Document everything: If you must take cash for unavoidable reasons, maintain clear invoices, identity proof of payer, and written explanations — but note documentation does not exempt you from the statutory limit. Tax2win
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When receiving payments for loans or deposits: Special rules and clarifications exist for loan repayments — these too should ideally be routed electronically. Tax advisors suggest treating instalments and whole repayments cautiously under the law. ClearTax
Bottom line
Yes — you can accept cash, but only up to ₹2 lakh from a single person in a day, a single transaction, or for a single event. If you accept more, the recipient bears the risk of a penalty equal to the amount received. Given the heavy financial exposure, the safest path is to insist on non-cash payment modes for large transactions. Staying compliant will help you avoid heavy fines and legal hassles.
