Income Tax Section 269ST - Mode of undertaking transactions ( New Section 186 )

 

Section 269ST of Income Tax Act — Cash Receipt Restriction 

Section 269ST is a strict anti-cash provision. It prohibits receiving large amounts in cash to curb black money and ensure traceable transactions.


✅ 1. Basic Rule of Section 269ST

No person shall receive ₹2,00,000 or more in cash:

  • From a person in a day, OR

  • For a single transaction, OR

  • For transactions relating to one event/occasion

If any of the above limits are crossed → cash receipt is illegal.

✅ 2. Important — Three Separate Triggers

Violation happens if any one condition is met:

✔ (A) From a person in a day

Cash received from one person in a single day ≥ ₹2 lakh.

✔ (B) Single transaction

Even if paid on different days — if linked to one transaction ≥ ₹2 lakh.

✔ (C) Event/occasion

Cash receipts connected to one event (like wedding booking, party, function) ≥ ₹2 lakh.

✅ 3. Allowed Modes of Receipt

Amounts ≥ ₹2 lakh must be received via:

  • Account payee cheque

  • Account payee bank draft

  • Electronic transfer (NEFT/RTGS/UPI etc.)

✅ 4. Penalty for Violation

Penalty under Section 271DA:

➡ Penalty = Amount received in cash

Example: Receive ₹3 lakh in cash → penalty may be ₹3 lakh.

Penalty may be waived only if genuine and reasonable cause is proven.

✅ 5. Exceptions — Where Section 269ST Does Not Apply

Cash receipt allowed when received by:

  • Government

  • Banking company / cooperative bank

  • Post office savings bank

  • Transactions covered under Section 269SS

✅ 6. Practical Examples

✔ Example 1 — Daily limit violation

Mr. A receives ₹2,50,000 cash from Mr. B in one day
→ ❌ Violation

✔ Example 2 — Single transaction split

Sale of goods = ₹2,20,000

Paid as:

₹1,10,000 cash (Day 1)
₹1,10,000 cash (Day 2)

→ ❌ Still violation (single transaction trigger)

✔ Example 3 — Event trigger

Wedding decorator receives ₹3 lakh cash for wedding booking
→ ❌ Violation

✔ Example 4 — Legal receipt

₹5 lakh received via bank transfer
→ ✅ Allowed


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