Cash Transaction Limits Everyone Should Know in FY 2026-27

Introduction

Cash transactions are closely monitored under the Income Tax Act to prevent tax evasion, black money circulation, and unaccounted financial activities. Businesses and individuals must understand the prescribed cash transaction limits to avoid penalties and remain compliant with tax regulations.

In FY 2026-27, several sections of the Income Tax Act continue to impose restrictions on cash expenses, loans, deposits, repayments, and property transactions. This guide explains the most important cash transaction limits every taxpayer and business owner should know.

1. Cash Expense Limit – Section 40A(3)

Under Section 40A(3), businesses cannot claim deductions for expenses paid in cash exceeding ₹10,000 in a single day to a single person.

Important Points:

• Cash payments above ₹10,000 are disallowed as business expenses.
• For transporters, the limit is ₹35,000 per day.
• Digital payments are always preferred for transparency and compliance.

2. Cash Loan / Deposit Acceptance – Section 269SS

A person cannot accept cash loans or deposits of ₹20,000 or more from another person in a single day or transaction.

Penalty:

• The penalty can be equal to the amount accepted in cash.
• Applies to loans, deposits, and specified sums related to property transactions.

3. Cash Loan Repayment – Section 269T

Repayment of loans or deposits of ₹20,000 or more in cash is prohibited under Section 269T.

Why This Matters:

• Cash repayments above the prescribed limit attract penalties.
• Repayments should be made through banking channels.

4. Cash Receipt Limit – Section 269ST

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

• From a single person in one day
• For a single transaction
• For transactions related to one event or occasion

Penalty:

• The penalty can be equal to the amount received.

5. High-Value Cash Deposits Reporting

Banks and financial institutions report high-value cash transactions to the Income Tax Department.

Examples Include:

• Cash deposits above ₹10 lakh in savings accounts during a financial year.
• Large cash deposits in current accounts.
• Unusual or suspicious cash activities.

6. Property Transactions in Cash

Cash transactions in property deals are heavily scrutinized under tax laws.

Important Rules:

• Cash receipts of ₹20,000 or more for property transactions are restricted.
• Stamp duty valuation may be considered by the Income Tax Department.
• Always use banking channels for property-related payments.

How to Stay Compliant

• Use digital payment methods whenever possible.
• Maintain proper invoices and transaction records.
• Avoid splitting transactions to bypass limits.
• Consult a Chartered Accountant before high-value transactions.

Conclusion

Understanding cash transaction limits is essential for businesses, professionals, and individuals. Non-compliance can lead to heavy penalties, tax notices, and disallowance of expenses.

SVV & Co. helps businesses and taxpayers stay compliant with Income Tax, GST, audit, and financial regulations through expert advisory and compliance support.

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