Cash Transactions Over ₹2 Lakh? CA Highlights 100% Tax Penalty Despite Splitting Payments!
Cash Transactions Over ₹2 Lakh? CA Highlights 100% Tax Penalty Despite Splitting Payments!
Cash transactions remain common in India, especially in real estate, business deals, and social functions. However, financial advisors are warning that exceeding the legal cash transaction limit can lead to severe penalties under tax laws.
A viral post by financial advisor CA Nitin Kaushik on X (formerly Twitter) highlights the risks of accepting large cash payments, even if split into smaller amounts.
Breaking ₹2 Lakh Cash Limit? Here’s What Happens
As per Section 269ST of the Income Tax Act, receiving ₹2 Lakh or more in cash, even in parts, attracts a 100% penalty—meaning you could lose the entire amount.
Examples of Violations:
- Receiving ₹2.5 Lakh in cash in a single day (e.g., ₹1.5 Lakh in the morning and ₹1 Lakh in the evening) violates tax laws.
- Accepting ₹1 Lakh daily for three days for a ₹3 Lakh property sale is still illegal.
- Payments for weddings or events count as one transaction. Spending ₹1.5 Lakh on catering and ₹1 Lakh on decorations totals ₹2.5 Lakh, triggering a penalty.
🚨 Receiving Over ₹2 Lakh in Cash? You Could Lose It ALL! 🚨
— CA Nitin Kaushik (@Finance_Bareek) March 21, 2025
Think you can dodge tax rules by splitting payments? Think again!
Under Section 269ST of the Income Tax Act, accepting ₹2 lakh or more in cash—even in parts—can attract a 100% penalty. That means you lose everything… pic.twitter.com/QUAKGAgKg6
Real-Life Horror Story 😱
— CA Nitin Kaushik (@Finance_Bareek) March 21, 2025
A seller received ₹5 lakh per month for six months for a property deal.
Each payment was under ₹2 lakh, but the total was ₹30 lakh.
Final penalty? ₹30 lakh—he lost it all! pic.twitter.com/bEjnKZu3dS
How to Stay Safe?
— CA Nitin Kaushik (@Finance_Bareek) March 21, 2025
✅ Use bank transfers, UPI, or digital payments.
✅ Never accept ₹2 lakh+ in cash—no matter how it’s split.
✅ Avoid large cash transactions in business, property, or events.
Many people unknowingly break this rule and pay the price. Don’t be one of them!… pic.twitter.com/clLMR5S7EA
A Costly Mistake: Real-Life Case
A seller accepted ₹5 Lakh monthly for six months for a property sale, believing smaller payments would avoid penalties. However, since the total reached ₹30 Lakh, the entire amount was seized by tax authorities.
How to Stay Safe?
Use Digital Payments – Prefer bank transfers, UPI, or online payments.
Keep Cash Transactions Below ₹2 Lakh – Even split payments count.
Avoid Large Cash Deals – Especially in business and property transactions.
Follow Tax Rules – Violating limits leads to serious penalties.
Bottom Line
Ignoring cash transaction rules can result in hefty fines and financial losses. Stay informed, use digital payment methods, and avoid unnecessary risks.
