The three ways a cash receipt breaches the Section 269ST ₹2 lakh limit

Section 269ST of the Income-tax Act prohibits any person from receiving ₹2,00,000 or more in cash. It is a receiver-side rule that bites on businesses, traders, jewellers, hospitals, and event vendors, and it is one of the most misunderstood cash-control provisions because it has three independent triggers — not one. The diagram above separates them, because a transaction can stay under the limit on one prong and breach it on another.

The first prong is **aggregate, per person, per day**: all the cash a person receives *from one other person in a single day* is summed. Splitting a ₹3 lakh sale into two ₹1.5 lakh cash receipts on the same day does not help — they aggregate, and the ₹2 lakh line is crossed. The second prong is **per single transaction**: cash of ₹2 lakh or more received against one transaction is barred *even if it is collected across several days*. A single invoice of ₹2.5 lakh cannot be settled in five ₹50,000 cash instalments. The third prong is **per single event or occasion**: cash tied to one event — a wedding, a contract, a function — aggregates across all the invoices raised for it, so a caterer taking cash under three separate bills for the same wedding still has one ₹269ST event.

The penalty is severe and falls on the wrong-footed party. Section 271DA levies a penalty **equal to the amount received** — a 100% penalty — on the *receiver* of the cash, not the payer. Receive ₹2.5 lakh in breach and the penalty is ₹2.5 lakh. The only relief is Section 273B, which lets the penalty be waived where the receiver proves a reasonable cause; in practice that is a high bar and not something to plan around.

For a business the safe operating rule is mechanical: route any receipt that could touch ₹2 lakh — by day, by transaction, or by event — through a bank channel (NEFT, RTGS, UPI, cheque, or card). A pakka bill that records a bank-channel payment with a UTR reference is the clean side of this line; a cash receipt approaching ₹2 lakh is the exposed side. The aggregation rules mean the breach is often invisible at the counter and only surfaces when the day's or the event's cash is totalled at audit.