Section 269ST: Rs. 2L Cash Receipt Limit

HRAReceipt.in maintains this Section 269ST reference for FY 2026-27, drawn from the statutory text and the CBDT exemption circulars. Section 269ST of the Income Tax Act, 1961, introduced by the Finance Act 2017 as part of India's demonetisation-era push towards a cashless economy, prohibits any person from receiving cash of Rs. 2,00,000 or more from a single source. Penalty under Section 271DA is 100% of the amount received, levied on the recipient regardless of intent. The Section prohibits receiving Rs. 2,00,000 or more in cash:

(a) In aggregate from a single person in a day

(b) In respect of a single transaction

(c) In respect of transactions relating to one event or occasion from a person

The rule applies to the recipient, not the payer. If you accept Rs. 2 lakh in cash, you are liable, even if the payer willingly gave it.

Under Section 271DA, the penalty for violating Section 269ST equals the amount received. If you accept Rs. 3,00,000 in cash from a single person, the penalty is Rs. 3,00,000 on top of losing nothing from the transaction itself.

The penalty falls on the person who receives the cash. There is no benefit-of-doubt clause. The law does not require intent to evade. Receipt itself is sufficient.

These transactions are exempt from Section 269ST:

- Government entities

- Banks and post offices

- Transactions covered under Section 269SS (loans and deposits, which have their own limit of Rs. 20,000)

- Receipts by way of inheritance or will

The exemption does NOT extend to real estate transactions, rent collection, service payments, or business receipts.

Landlords: Collecting more than Rs. 2 lakh in cash for rent from a single tenant in a day violates Section 269ST. Monthly rent up to Rs. 1.99 lakh in cash is technically allowed per the wording, but aggregate daily receipts apply. Best practice: collect rent via bank transfer and issue compliant rent receipts with UTR.

Property sales: Sellers accepting cash from buyers for earnest money, brokerage, or partial payment above Rs. 2 lakh are at risk.

Service providers: A consultant, contractor, or tutor receiving more than Rs. 2 lakh cash payment for a single contract or project falls under this rule. Issue a GST tax invoice (pakka bill) for the service and a separate payment receipt once funds clear.

Events and functions: Caterers, tent houses, decorators, and wedding planners collecting cash above Rs. 2 lakh for a single event from one family are covered.

The solution is straightforward: use UPI, NEFT, RTGS, account-payee cheque, or bank transfer for transactions at or above Rs. 2 lakh. These create an audit trail and are exempt from Section 269ST.

For transactions just below the limit: aggregate rules apply across a day. Multiple small cash payments from the same person on the same day can trigger the provision if the total crosses Rs. 2 lakh.

Always issue a payment receipt with payment mode and UTR/reference number. This protects both parties in any future dispute or inquiry. For background on the difference between an invoice, a receipt, and a quotation, see our guide on invoice vs receipt vs quotation.