Answer Book question
You cannot, and the penalty is 100% of the amount, payable by the person who received it. Section 269ST of the Income-tax Act bars receiving ₹2 lakh or more in cash from one person in a day, for one transaction, or for one event or occasion, even if paid in parts on different days. Weddings, gold sales, land advances, a big catering bill: all covered. Banks, post offices and government bodies are the only exempt receivers. Loans and deposits have a separate and stricter ₹20,000 limit.
You cannot, and the penalty is 100% of the amount, payable by the person who received it. Section 269ST of the Income-tax Act bars receiving ₹2 lakh or more in cash from one person in a day, for one transaction, or for one event or occasion, even if paid in parts on different days. Weddings, gold sales, land advances, a big catering bill: all covered. Banks, post offices and government bodies are the only exempt receivers. Loans and deposits have a separate and stricter ₹20,000 limit.
A family in Adoor sells old gold for ₹3.2 lakh and takes cash. The jeweller has a bill; the family has a deposit slip. The receiver of the cash, the family, is liable to a ₹3.2 lakh penalty under Section 271DA if the assessing officer picks it up. The jeweller's own cash purchase reporting is how it gets picked up.
Section 269ST, in force since April 2017, is a restriction on receiving, not paying. Three tests, any one of which triggers it: aggregate cash of ₹2 lakh or more from a person in a single day; ₹2 lakh or more in cash for a single transaction however many days it is spread over; ₹2 lakh or more in cash from a person for transactions relating to one event or occasion.
The penalty under Section 271DA equals the amount received, unless you show 'good and sufficient reasons', which tax tribunals have read narrowly. Separately, Section 269SS bars accepting a loan, deposit or any advance for immovable property of ₹20,000 or more in cash, with a 100% penalty under 271D; Section 269T bars repaying such sums in cash, with a 100% penalty under 271E. Sub-registrars report property transactions with cash components to the tax department.
Cash gifts are within 269ST even when the gift itself is tax-free.
Who is receiving: the penalty lands on the receiver, so a seller should insist on bank transfer Whether several payments relate to one transaction or one event; instalments of one sale are aggregated Whether the receipt is an advance for property (₹20,000 limit under 269SS, not ₹2 lakh) Whether the payer is depositing cash into your account 'on your behalf'; that is still cash received Wedding contractors: the caterer, decorator and hall are each receivers and each are caught by the single-event test
Splitting. ₹1.9 lakh today and ₹1.9 lakh tomorrow for the same sale is one transaction of ₹3.8 lakh. The test that catches most people is the 'single transaction' one, not the daily one.
Gold, land advances and wedding payments are the three Kerala habits most exposed. A 'token advance' of ₹1 lakh in cash for a plot is a 269SS breach by the receiver. NRIs bringing foreign currency should convert and pay through banks; cash handed over at home is the same problem.
Plot sold for ₹40 lakh. Buyer pays ₹5 lakh cash advance and ₹35 lakh by cheque. Seller's exposure: ₹5 lakh penalty under 271D (advance for immovable property, ₹20,000 limit). Had the ₹5 lakh been for furniture in a separate agreement, 269ST and a ₹5 lakh penalty under 271DA would apply instead. Either way, the cash is the problem.
Withdrawing your own cash from your own bank is not receipt from a person. Receiving ₹1.5 lakh cash for one sale and ₹1.5 lakh for a genuinely separate sale from the same person on different days is permitted. Emergencies with clear evidence have occasionally been accepted as reasons; do not rely on it.
Take every receipt of ₹2 lakh or more by account-payee cheque, draft, UPI, NEFT or RTGS For property advances, no cash at all; ₹20,000 is the line If cash has already been received, talk to a chartered accountant before the department writes to you
Can I pay cash for land? What is 'fair value' and why does it matter? I withdrew a lot of cash this year. Why did the bank deduct tax?
Tax & compliance (CA referral)
Income-tax Act, 1961, Sections 269SS, 269ST, 269T, 271D, 271DA, 271E · CBDT circulars clarifying loan instalments and event aggregation · Your sale deed, receipts and bank statements Last checked: 22 August 2026. Rates, limits and whether you may qualify change. Confirm with the official source before you act. Ask Kerala Rising: Use only general, non-identifying facts.
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