Cash Transaction Limits in India (2026): Sections 269ST, 269SS, 269T — and the Wedding-Cash Trap
By the CreditSmart editorial team, reviewed by a practising CA · September 2026
The 30-second version
India doesn’t ban cash — it bans large cash, and the penalties fall on the receiver. Receive ₹2 lakh or more in cash from one person, one transaction, or one occasion (a wedding counts as one occasion) and Section 269ST’s penalty is 100% of the amount. Cash loans of ₹20,000+ (269SS/269T) carry the same 100% hit, business cash expenses above ₹10,000/day are disallowed, and ₹10 lakh+ of yearly cash deposits lands in your AIS automatically.
The ₹2 lakh rule — Section 269ST
No person may receive ₹2,00,000 or more in cash:
- from a single person in a single day (even across multiple bills), or
- for a single transaction (even paid in instalments across days), or
- for transactions relating to a single event or occasion.
Penalty: 100% of the amount received (Section 271DA) — receive ₹5 lakh in cash, owe ₹5 lakh. It targets the receiver; ignorance is no defence, though a genuine-cause discretion exists.
The wedding-cash trap
Two laws collide at weddings. Gifts on the occasion of your marriage are income-tax exempt without limit (details in our gift-tax guide) — but 269ST operates independently, and a marriage is a “single occasion”:
| Scenario | Income tax | 269ST |
|---|---|---|
| Many relatives, each < ₹2L cash | Exempt | Outside the section — keep a gift register |
| One uncle, ₹3L cash shagun | Exempt | Penalty territory — take transfer/cheque instead |
| ₹3L from one person by NEFT/UPI | Exempt | No issue — the section only touches cash |
Depositing wedding cash? Banks report large deposits and AIS shows them — keep a dated gift list (name, amount, relation) made before the deposit, not after the notice.
Cash loans — 269SS and 269T
Taking a loan or deposit of ₹20,000+ in cash is barred (269SS); repaying one in cash is equally barred (269T). Penalty: 100% each way (271D/271E). This catches family “hand loans” constantly — a ₹1 lakh cash loan from a brother-in-law creates exposure when taken and when repaid. Route family loans by bank transfer with a one-page note of terms.
The other ceilings worth knowing
- Business expenses (40A(3)): cash above ₹10,000/day to one person → expense disallowed (₹35,000 for transporters).
- Donations (80G): no deduction for cash donations above ₹2,000.
- Health insurance (80D): cash premiums don’t qualify (only preventive check-ups up to ₹5,000).
- Property: ₹20,000+ cash for property advances falls under 269SS.
- Bank reporting: ₹10 lakh+/year cash deposits in savings accounts (₹50L current) auto-reported to your AIS.
The cash-safety checklist
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- Never receive ₹2L+ cash from one person/transaction/occasion — change the mode, not the amount.
- Weddings: gift register on the day; big gifts by transfer only.
- Family loans ₹20k+: bank transfer both ways, with a written note.
- Business: no cash expense over ₹10k/day per person.
- Donations >₹2k and insurance premiums: never cash.
- Bulk deposits: build the source trail before the AIS flags it.
FAQs
₹1.9 lakh cash from each of three relatives — fine?
Each is under the per-person line, but a wedding’s “single occasion” language makes stacking risky. Transfers are simply safer.
Who pays the penalty — giver or receiver?
The receiver: 271DA for 269ST, 271D/271E for the loan sections.
Are cash gifts from relatives taxable?
Gifts from specified relatives are income-tax exempt at any amount — the cash-receipt penalties operate separately.
Related: Tax on gifts received · AIS vs TIS · NRI property rules
General information, not tax advice. Penalty provisions are fact-specific — consult your CA.
Credit Smart India · IG: @creditsmart.in · FB/YT: @creditsmartindia · Last updated: September 2026