Cash transaction limits under 269SS, 269T and 269ST

If you accept OR repay a loan, deposit or property advance of Rs 20,000 or more in cash, the Income-tax Act lets the department levy a penalty of 100 percent of that amount. Take Rs 5 lakh as a hand loan in cash and the penalty can be the full Rs 5 lakh, on top of any tax. Separately, no person may receive Rs 2 lakh or more in cash from one person in a day or for a single event. These are flat, regime-neutral penalties, not deductions, so they bite under both the old and the new tax regime.

These are three distinct triggers. Knowing which one applies decides which penalty section the Assessing Officer reaches for.

1. Section 269SS - taking money in. You cannot accept a loan, deposit or “specified sum” of Rs 20,000 or more otherwise than by account-payee cheque, account-payee bank draft or electronic transfer (NEFT, RTGS, UPI, IMPS). The loan limb and the deposit limb are general; they cover any loan or any deposit of money, not just property deals. The third limb, “specified sum”, was added in 2015 and means any sum receivable, whether as advance or otherwise, in relation to the transfer of immovable property, whether or not the transfer eventually happens. So a cash booking advance on a flat is squarely covered.

1. Section 269T - paying money out. You cannot repay a loan, deposit or “specified advance” of Rs 20,000 or more in cash. “Specified advance” is the mirror image: a sum received as advance for transfer of immovable property that is being returned, for instance when a property deal falls through and the seller hands the buyer's advance back in cash.

1. Section 269ST - any big cash receipt. Quite apart from loans, no person may receive Rs 2 lakh or more in cash (a) in aggregate from one person in a day, (b) for a single transaction, or © for transactions relating to one event or occasion. This catches a cash sale, a cash gift, a cash settlement or splitting a Rs 6 lakh wedding-catering bill into three cash payments on different days. For the full Rs 2 lakh rule, see our guide to the Section 269ST cash limit.

The Rs 20,000 test under 269SS and 269T is not only per transaction. It also looks at the running balance: if earlier cash loans from the same person already stand at Rs 20,000 or more, even a fresh small amount in cash falls foul of the section.

Need to ask a bank, registrar or tax office for records of a cash transaction or a penalty order? The AI RTI Drafter can frame the request, and the Timeline Tracker keeps your reply deadlines straight under the RTI Act, 2005.

The exceptions are narrow and you should not assume one applies. For Sections 269SS and 269T, the carve-outs include:

• the Government;
• any banking company, post office savings bank or co-operative bank;
• any corporation established by a Central, State or Provincial Act;
• any Government company as defined in the Companies Act; and
• loans or deposits where both parties have only agricultural income and neither has any income chargeable to tax under the Act.

For Section 269ST, the exceptions are different and you must not borrow the agriculturist carve-out from 269SS. The 269ST exclusions are: the Government; any banking company, post office savings bank or co-operative bank; receipts already covered by Section 269SS (so the same cash loan is not penalised twice); and other persons or transactions notified by the Central Government. Cash withdrawals from your own bank account are not a “receipt” caught by 269ST.

If you ever face such a penalty order, Section 273B gives a defence: no penalty is leviable if you can show reasonable cause for the cash dealing (for example, a genuine emergency, or a lender who insisted on cash). It is a defence you must prove, not an automatic escape.

It applies per lender or depositor and looks at the amount taken or repaid in a single dealing, but it also aggregates the outstanding balance from the same person. Several Rs 19,000 cash loans from one person that together cross Rs 20,000 can still attract the penalty.

Yes. Since 2015, a “specified sum” - any advance received in relation to the transfer of immovable property - is covered, whether or not the sale finally goes through. A cash booking advance of Rs 20,000 or more breaches 269SS.

The penalty is imposed by the Joint Commissioner of Income-tax and equals 100 percent of the cash amount: under Section 271D for breaching 269SS, Section 271E for breaching 269T, and Section 271DA for breaching 269ST.

Yes. Section 269ST restricts cash you receive from another person; drawing your own money out of your account is not a receipt caught by the section. Banks may, however, deduct TDS under Section 194N on very large yearly cash withdrawals, which is a separate rule.

Section 273B lets you escape the penalty if you prove a genuine “reasonable cause”, such as a real emergency or a lender who refused any other mode. Courts have cancelled penalties on this ground, but the burden of proof is on you, so keep documents.

Only narrowly. The 269SS and 269T exemption applies where both parties earn only agricultural income and neither has any taxable income under the Act. If either party has taxable income, the exemption is gone. This farmer carve-out does not extend to Section 269ST.

• Income-tax Act, 1961 - Section 269SS (mode of accepting loans, deposits and specified sums): https://www.incometaxindia.gov.in/w/section-269ss-37
• Income-tax Act, 1961 - Section 271D (penalty for breach of 269SS): https://www.incometaxindia.gov.in/w/section-271d-31
• Income-tax Act, 1961 - full bare Act (Sections 269T, 271E, 269ST, 271DA): https://www.indiacode.nic.in/bitstream/123456789/2435/1/a1961-43.pdf
• India Code - Section 269SS entry: https://www.indiacode.nic.in/show-data?actid=AC_CEN_2_2_00039_196143_1524045010860&sectionId=45159&sectionno=269SS&orderno=731
• The RTI Playbook (how to obtain records and challenge official action): The RTI Playbook

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