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How to read section numbers: s.80C→s.123 means Section 80C of the Income-tax Act, 1961 is now Section 123 of the Income-tax Act, 2025 (in force from 1 April 2026). Returns for FY 2025-26 still use the old numbers; Tax Year 2026-27 onwards uses the new ones. Section Finder
Key cash rules
| Rule (1961 Act) | Limit | Consequence |
|---|---|---|
| 40A(3) cash payment for expenses | ₹10,000 per person per day | Expense disallowed |
| 269SS cash loans / deposits taken | ₹20,000 | Penalty equal to the amount |
| 269T cash repayment of loans | ₹20,000 | Penalty equal to the amount |
| 269ST cash received | ₹2 lakh in a day / single transaction / one event | Penalty equal to the amount |
Exceptions
Payments to banks and government, to farmers for agricultural produce, in villages without bank facilities, and a few other notified cases are exempt from the ₹10,000 rule.
Worked example
Example
Example: A shop pays a supplier ₹14,000 in cash on one day for goods. The full ₹14,000 is disallowed — not just ₹4,000.
Common mistakes
- Splitting one bill into two cash payments on the same day
- Accepting ₹2 lakh+ cash for a property or wedding booking
Frequently asked questions
Not practically — under 44AD income is deemed, so expenses are not separately claimed.
Last reviewed on 11 November 2026 by Vinay Jaglan, VJ & Associates. Law and portal screens change — verify before acting, or ask the office.
