INCOME TAX NEW CASH LIMIT 2026: 100% TAX / PENALTY ON CASH TRANSACTIONS

INCOME TAX NEW CASH LIMIT 2026: 100% TAX / PENALTY ON CASH TRANSACTIONS

Complete Guide by ActiveTaxPro Advisory (SEO-Friendly Long Post)

Cash transactions have always been under strict watch by the Income Tax Department. As we move into FY 2025–26 / AY 2026–27, the government continues its strong push toward Digital Payments, Transparency, & Curbing Black Money. Many taxpayers are searching for “Income Tax new cash limit 2026” and “100% tax on cash transactions”.

This detailed guide by ActiveTaxPro Advisory explains current cash limits, applicable sections, 100% penalty risks, and how to stay compliant—in simple language and with practical examples.

What Is the Income Tax Cash Limit in 2026?

There is no relaxation in cash rules for 2026. In fact, enforcement has become stricter. The Income Tax Act already prescribes clear limits on cash receipts, cash payments, loans, and expenses. Any violation can attract heavy penalties—up to 100% of the cash amount.

Important: “100% tax” generally means penalty equal to the cash amount, not normal income tax slab rates.

Cash Receipt Limit – Section 269ST:

• Under Section 269ST, no person can receive 2,00,000 or more in cash:
• ·       From one person in a day, or
• ·       In respect of one transaction, or
• ·       In respect of transactions relating to one event or occasion

Penalty – Section 271DA (100%)

• If you violate Section 269ST:

·       Penalty = 100% of the cash amount received

• ·       Example:
• ·       Cash received: 3,00,000
• ·       Penalty: 3,00,000 (equal to cash received)

This rule applies to individuals, firms, companies, traders, professionals, and businesses.

Cash Payment Limit for Expenses – Section 40A (3)

If a business or professional makes cash payment exceeding ₹10,000 in a single day to one person:

• ·       That expense will not be allowed as a deduction
• ·       Your taxable profit increases, leading to higher tax

Special Transport Limit:

·       For transporters: Cash limit is 35,000 per day per person

Cash Loan & Deposit Limit – Sections 269SS and 269T:

• Section 269SS (Taking Loan/Deposit)
• ·       Cash loan or deposit above 20,000 is not allowed
• Section 269T (Repayment of Loan/Deposit)
• ·       Repayment in cash above 20,000 is not allowed
• Penalty – 100%
• ·       Penalty equals the amount of loan or repayment made in cash

Property Transactions & Cash

• ·       Cash payment of 20,000 or more in property transactions is strictly prohibited
• ·       Even advance in cash can attract scrutiny
• ·       High-value property deals are automatically reported to the Income Tax Department

Why Is the Government So Strict in 2026?

The focus areas are:

• ·       Curb black money
• ·       Promote digital economy
• ·       Track unreported income
• ·       Reduce tax evasion
• ·       Strengthen data matching through PAN, AIS & banking reports

With improved AI-based scrutiny, even small cash violations can trigger notices and penalties.

Common Mistakes That Attract 100% Penalty

• ·       Receiving 2,00,000+ cash from a client
• ·       Splitting one transaction into multiple cash receipts
• ·       Cash sales during marriage or events exceeding limits
• ·       Cash repayment of personal or business loans
• ·       Large cash expenses shown in books
• ·       Accepting cash to avoid GST or banking trail

How to Stay Safe from Cash Penalty in 2026

• ·       Accept payments via bank transfer, UPI, cheque, RTGS, NEFT
• ·       Avoid cash dealings beyond prescribed limits
• ·       Maintain proper books of accounts
• ·       Match income with AIS & bank statements
• ·       Take professional advice before high-value transactions

Frequently Asked Questions (FAQ)

Q1. Is there really 100% tax on cash in 2026?

It is 100% penalty, not normal income tax, under specific sections like 271DA, 271D, 271E.

Q2. Can I take 2 lakh cash from one person?

No. Even 2,00,000 exactly can be risky. Always stay below limits or use banking modes.

Q3. Does this apply to individuals also?

Yes. Individuals, businessmen, professionals—everyone is covered.

Final Words from ActiveTaxPro Advisory!

Cash transactions may look convenient, but in 2026 they are extremely risky. A single mistake can lead to 100% penalty, income tax notices, and long litigation.

 If you are unsure about Cash Limits, Notices, Or Compliance, get expert help from ActiveTaxPro Advisory—your trusted partner for Income Tax, GST, and compliance solutions.