Cash rules under Income tax : How much cash can you receive in one day to avoid an I-T notice?

Cash transactions over ₹2 lakh may attract penalty

You can be subject to a fine if you make a cash transaction for more than ₹2 lakh or receive that much in a single day. If you make a cash transaction of ₹5 lakh, you might have to pay a penalty of the same amount if the Income Tax Department finds the breach during an audit.

Those who accept cash beyond two lakhs, in contravention of this provision, can be subjected to a penalty equal to cash received. It is interesting to note that the payer does not have responsibility under these provisions.

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What Section 269ST says about cash rules

According to Section 269ST, no one may receive more than ₹2 lakh (the cash receipt limit) from a person in any of the following situations: in total from a person in a single day, in connection with a single transaction, or connection with transactions from a person related to a single event or occasion.

However, there are certain exceptions to this rule (e.g. banking companies are exempt from this rule), and hence, the applicability would generally depend on the nature of the transaction. Hence, one needs to ensure that the transaction (or receipt of cash) is within the applicable limits depending on the nature of thetransaction proposed to be undertaken.

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