01/09/2026
๐ ๐๐ข๐ ๐ฃ๐ฅ๐๐๐๐ก๐ฆ๐๐ฉ๐ ๐ฆ๐ง๐จ๐๐ฌ ๐๐จ๐๐๐
๐ฐ ๐๐ก๐๐ข๐ ๐ ๐ง๐๐ซ ๐๐๐ฆ๐ ๐ง๐ฅ๐๐ก๐ฆ๐๐๐ง๐๐ข๐ก ๐๐๐ ๐๐ง๐ฆ & ๐ฅ๐๐๐จ๐๐๐ง๐ข๐ฅ๐ฌ ๐๐ข๐ ๐ฃ๐๐๐๐ก๐๐
โโโโโโโโโโโโโโโโโโ
This study guide provides an exhaustive analysis of the cash transaction limits, reporting requirements, and penalty frameworks under the Income-tax Act, 1961, along with the regulatory changes applicable from 2026.
It is designed as a practical reference for understanding the legal boundaries of cash transactions and important tax compliance requirements.
โโโโโโโโโโโโโโโโโโ
๐ต ๐ ๐ข๐๐จ๐๐ ๐ญ: ๐ง๐๐ ๐๐ข๐ฅ๐ ๐๐๐ฆ๐ ๐๐๐ ๐๐ง๐ฆ ๐ข๐ก ๐ฅ๐๐๐๐๐ฃ๐ง๐ฆ & ๐๐๐๐ง๐๐ก๐
๐ง๐ต๐ฒ โน๐ฎ ๐๐๐๐ ๐๐๐ฅ๐ฅ๐๐๐ฅ โ ๐ฆ๐๐๐ง๐๐ข๐ก ๐ฎ๐ฒ๐ต๐ฆ๐ง
Section 269ST restricts receiving an amount of โน2 lakh or more in cash.
The restriction operates through three important limbs:
1๏ธโฃ ๐ฆ๐๐ก๐๐๐ ๐๐๐ฌ
Receiving โน2 lakh or more from a person in one day, even if the payments relate to different purposes.
2๏ธโฃ ๐ฆ๐๐ก๐๐๐ ๐ง๐ฅ๐๐ก๐ฆ๐๐๐ง๐๐ข๐ก
Receiving โน2 lakh or more in respect of a single transaction, even when payment is split over multiple days.
3๏ธโฃ ๐ฆ๐๐ก๐๐๐ ๐๐ฉ๐๐ก๐ง ๐ข๐ฅ ๐ข๐๐๐๐ฆ๐๐ข๐ก
Receiving โน2 lakh or more relating to one event or occasion, such as a wedding or function.
โ ๏ธ ๐ฃ๐๐ก๐๐๐ง๐ฌ โ ๐ฆ๐๐๐ง๐๐ข๐ก ๐ฎ๐ณ๐ญ๐๐
The penalty for violating Section 269ST can be equal to 100% of the amount received.
๐ ๐ง๐๐ โ๐ฅ๐๐๐๐ง๐๐ฉ๐ ๐๐๐๐งโ ๐ ๐ฌ๐ง๐
A common misconception is that cash gifts from relatives are completely safe.
While a genuine gift from a specified relative may be exempt from income tax under Section 56, the mode of receiving the money is a separate compliance issue.
Therefore, Section 269ST may still apply to large cash receipts.
๐ ๐๐ฌ๐ฃ๐ข๐ง๐๐๐ง๐๐๐๐ ๐๐๐ฆ๐
An individual receives a cash gift of โน2.5 lakh from a sibling.
โก๏ธ Gift may be exempt from income tax as a relative gift.
โก๏ธ However, receiving โน2.5 lakh in cash may violate Section 269ST.
โก๏ธ The potential penalty under Section 271DA can be โน2.5 lakh.
โโโโโโโโโโโโโโโโโโ
๐ข ๐ ๐ข๐๐จ๐๐ ๐ฎ: ๐๐ข๐ฅ๐ฅ๐ข๐ช๐๐ก๐, ๐๐๐ก๐๐๐ก๐ & ๐ฅ๐๐ฃ๐๐ฌ๐๐ก๐
๐ต ๐ง๐๐ โน๐ฎ๐ฌ,๐ฌ๐ฌ๐ฌ ๐๐๐ฅ๐ฅ๐๐๐ฅ
๐ฆ๐๐๐ง๐๐ข๐ก ๐ฎ๐ฒ๐ต๐ฆ๐ฆ
Generally prohibits accepting a loan, deposit or specified sum of โน20,000 or more in cash.
๐ฆ๐๐๐ง๐๐ข๐ก ๐ฎ๐ฒ๐ต๐ง
Generally restricts repayment of loans or deposits of โน20,000 or more in cash.
๐ ๐ฃ๐ฅ๐ข๐ฃ๐๐ฅ๐ง๐ฌ ๐ง๐ฅ๐๐ก๐ฆ๐๐๐ง๐๐ข๐ก๐ฆ
The โน20,000 threshold is particularly important for advances relating to transfer of immovable property.
โ ๏ธ ๐ฃ๐๐ก๐๐๐ง๐ฌ
Violation of Section 269SS can attract a penalty equal to the amount accepted under Section 271D.
Violation of Section 269T can attract a penalty equal to the amount repaid under Section 271E.
๐พ ๐๐ข-๐ข๐ฃ๐๐ฅ๐๐ง๐๐ฉ๐ ๐๐ซ๐๐๐ฃ๐ง๐๐ข๐ก๐ฆ
Special provisions apply to specified transactions involving:
โข Primary Agricultural Credit Societies (PACS)
โข Primary Co-operative Agricultural and Rural Development Banks (PCARDB)
๐ ๐๐๐ฆ๐ ๐ฆ๐ง๐จ๐๐ฌ
A homebuyer pays โน50,000 in cash as a property token/advance.
โก๏ธ The transaction can attract Section 269SS implications.
โก๏ธ The recipient may face a penalty equal to the amount accepted.
โโโโโโโโโโโโโโโโโโ
๐ ๐ ๐ข๐๐จ๐๐ ๐ฏ: ๐๐จ๐ฆ๐๐ก๐๐ฆ๐ฆ ๐๐ซ๐ฃ๐๐ก๐ฆ๐๐ฆ & ๐๐๐ฆ๐ ๐๐๐ ๐๐ง๐๐ง๐๐ข๐ก๐ฆ
๐ผ ๐ง๐๐ โน๐ญ๐ฌ,๐ฌ๐ฌ๐ฌ ๐๐จ๐ฆ๐๐ก๐๐ฆ๐ฆ ๐๐ซ๐ฃ๐๐ก๐๐๐ง๐จ๐ฅ๐ ๐๐๐๐๐๐ก๐
Under Section 40A(3), cash payments exceeding โน10,000 in a day to a person can result in disallowance of the expenditure.
๐ ๐๐ข๐ข๐๐ฆ ๐๐๐ฅ๐ฅ๐๐๐๐๐ฆ
For payments to operators of goods carriages, the threshold is โน35,000.
๐ก๏ธ ๐ฅ๐จ๐๐ ๐ฒ๐๐ ๐๐ซ๐๐๐ฃ๐ง๐๐ข๐ก๐ฆ
Certain genuine circumstances are specifically covered under Rule 6DD, where cash payments may be allowed without disallowance.
Examples include specified payments involving banks, Government payments, areas without banking facilities and certain purchases from producers of agricultural, dairy and cottage-industry products.
โค๏ธ ๐๐๐ฆ๐ ๐๐ข๐ก๐๐ง๐๐ข๐ก๐ฆ โ ๐ฆ๐๐๐ง๐๐ข๐ก ๐ด๐ฌ๐
Cash donations exceeding โน2,000 generally do not qualify for deduction under Section 80G.
๐ ๐๐๐ฆ๐ ๐ฆ๐ง๐จ๐๐ฌ
A retail shop pays โน15,000 in cash to a maintenance contractor in a single day.
โก๏ธ Subject to applicable exceptions, the expenditure may be disallowed under Section 40A(3).
โโโโโโโโโโโโโโโโโโ
๐ต ๐ ๐ข๐๐จ๐๐ ๐ฐ: ๐ง๐๐ฆ ๐ข๐ก ๐๐๐ฆ๐ ๐ช๐๐ง๐๐๐ฅ๐๐ช๐๐๐ฆ
๐จ ๐ง๐๐ ๐ฎ๐ฌ๐ฎ๐ฒ ๐ฅ๐๐๐จ๐๐๐ง๐ข๐ฅ๐ฌ ๐ฆ๐๐๐๐ง
From 1 April 2026, the new Income-tax framework introduces provisions relating to TDS on cash withdrawals under Section 393 of the Income-tax Act, 2025.
๐ ๐ข๐๐ ๐ฉ๐ฆ ๐ก๐๐ช ๐๐๐๐๐จ๐๐๐ง๐๐ข๐ก
Suppose a regular filer withdraws โน1.10 crore in cash during the year.
๐น ๐ข๐๐ ๐ฅ๐จ๐๐ โ ๐ฆ๐๐๐ง๐๐ข๐ก ๐ญ๐ต๐ฐ๐ก
Excess over โน1 crore:
โน1.10 Cr โ โน1 Cr = โน10 lakh
TDS @ 2% = โน20,000
๐น ๐ก๐๐ช ๐ฅ๐จ๐๐ โ ๐ฆ๐๐๐ง๐๐ข๐ก ๐ฏ๐ต๐ฏ
If the applicable threshold is crossed, the prescribed TDS calculation can apply to the cumulative withdrawal amount.
2% of โน1.10 crore = โน2,20,000
๐ ๐ง๐๐ฅ๐๐ฆ๐๐ข๐๐๐ฆ
๐ฅ๐ฒ๐ด๐๐น๐ฎ๐ฟ ๐๐ง ๐๐ถ๐น๐ฒ๐ฟ๐ โ โน1 Crore
๐๐ผ-๐ผ๐ฝ๐ฒ๐ฟ๐ฎ๐๐ถ๐๐ฒ ๐ฆ๐ผ๐ฐ๐ถ๐ฒ๐๐ถ๐ฒ๐ โ โน3 Crore
๐ก๐ผ๐ป-๐๐ถ๐น๐ฒ๐ฟ๐ โ โน20 Lakh
โโโโโโโโโโโโโโโโโโ
๐ฃ ๐ ๐ข๐๐จ๐๐ ๐ฑ: ๐๐ก๐๐ข๐ ๐ ๐ง๐๐ซ ๐ฅ๐จ๐๐๐ฆ ๐ฎ๐ฌ๐ฎ๐ฒ & ๐ฃ๐๐ก ๐ฅ๐๐ฃ๐ข๐ฅ๐ง๐๐ก๐
๐
๐๐ฅ๐ข๐ ๐ญ ๐๐ฃ๐ฅ๐๐ ๐ฎ๐ฌ๐ฎ๐ฒ
The focus is increasingly shifting from individual daily transactions toward annual financial footprints and cumulative reporting.
๐ ๐ฃ๐ฅ๐ข๐ฃ๐ข๐ฆ๐๐ / ๐ก๐๐ช ๐ฃ๐๐ก ๐ฅ๐๐ฃ๐ข๐ฅ๐ง๐๐ก๐ ๐ง๐๐ฅ๐๐ฆ๐๐ข๐๐๐ฆ
1๏ธโฃ ๐๐๐ฆ๐ ๐๐๐ฃ๐ข๐ฆ๐๐ง๐ฆ / ๐ช๐๐ง๐๐๐ฅ๐๐ช๐๐๐ฆ
PAN quoting/reporting requirements apply to cumulative cash transactions exceeding โน10 lakh in a financial year across applicable bank, co-operative bank or post-office accounts.
2๏ธโฃ ๐๐ ๐ ๐ข๐ฉ๐๐๐๐ ๐ฃ๐ฅ๐ข๐ฃ๐๐ฅ๐ง๐ฌ
Reporting/PAN-related threshold proposed at โน20 lakh under the new framework.
3๏ธโฃ ๐ ๐ข๐ง๐ข๐ฅ ๐ฉ๐๐๐๐๐๐๐ฆ
PAN requirements apply to specified transactions exceeding โน5 lakh.
4๏ธโฃ ๐ฆ๐๐๐จ๐ฅ๐๐ง๐๐๐ฆ
Specified securities transactions may attract PAN requirements at prescribed thresholds.
5๏ธโฃ ๐ ๐๐ก๐๐๐ง๐ข๐ฅ๐ฌ ๐ฃ๐๐ก ๐ฅ๐๐๐๐ง๐๐ข๐ก๐ฆ๐๐๐ฃ๐ฆ
PAN is required for specified relationships/transactions such as:
โข Opening specified bank accounts
โข Applying for a credit card
โข Establishing specified insurance relationships
โโโโโโโโโโโโโโโโโโ
๐ก ๐๐๐ฌ ๐ง๐๐๐๐๐ช๐๐ฌ
Cash transactions are not completely prohibited.
However, the Income-tax law places important limits on:
๐ฐ Cash Receipts
๐ฆ Loans & Deposits
๐ผ Business Expenses
๐ Cash Donations
๐ง Cash Withdrawals
๐ Property Transactions
๐ Motor Vehicle Transactions
๐ชช PAN Reporting
๐๐ก๐ข๐ช ๐ง๐๐ ๐๐๐ ๐๐ง.
๐๐ก๐ข๐ช ๐ง๐๐ ๐ฃ๐๐ก๐๐๐ง๐ฌ.
๐๐ก๐ข๐ช ๐ง๐๐ ๐๐ข๐ ๐ฃ๐๐๐๐ก๐๐.
โโโโโโโโโโโโโโโโโโ
๐ข ๐๐ข๐ฅ ๐ง๐๐ซ & ๐๐ข๐ ๐ฃ๐๐๐๐ก๐๐ ๐จ๐ฃ๐๐๐ง๐๐ฆ
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GST & INCOME TAX | PAN India Service
๐ Purnia, Bihar
