What is the ₹2 lakh cash receipt limit?

What does section 186 prohibit?

Section 186(1) of the Income-tax Act, 2025 says no person shall receive ₹2 lakh or more except through an allowed mode. The Act came into force on 1 April 2026. For a receipt on or after that date, section 186 is the provision. The familiar label, section 269ST of the Income-tax Act, 1961, is the provision for a receipt on or before 31 March 2026. The ₹2 lakh figure did not move. The section number did.

"Two lakh rupees or more" includes exactly ₹2 lakh. A cash receipt of ₹1,99,999 is under the line. A cash receipt of ₹2,00,000 is on it. Section 186 addresses the person who receives. A gift counts, and so does a shop sale.

Which three tests can be breached?

Section 186(1) has three tests. Any one of them, at ₹2 lakh or more, is a breach.

What does the one-day test catch?

Section 186(1)(a) catches ₹2 lakh or more in aggregate from a person in a day. Two cash receipts from the same person on the same day are added. Receipts from two different persons are not added together for this limb.

What does the single-transaction test catch?

Section 186(1)(b) catches ₹2 lakh or more in respect of a single transaction. This limb does not say "from a person" and it does not say "in a day". Splitting one invoice into cash payments on different days does not take the invoice under ₹2 lakh.

What does the one-occasion test catch?

Section 186(1)(c) catches ₹2 lakh or more in respect of transactions relating to one event or occasion from a person. A wedding, a property booking, or a single contract spread across several bills can be one occasion. The statute does not define "occasion" further. If you are treating several receipts as unrelated, be ready to say why they are not one event.

Which payment modes are allowed?

Section 186(1) itself allows four routes. An account payee cheque. An account payee bank draft. An electronic clearing system through a bank account. Any other electronic mode, as prescribed. A bearer cheque is not an account payee cheque. Cash is not on the list.

The prescribed modes are in rule 48 of the Income-tax Rules, 2026, notified by G.S.R. 198(E) dated 20 March 2026. Rule 48 applies to sections 185, 186 and 188. For section 186, the other electronic modes are credit card, debit card, net banking, IMPS, UPI, RTGS, NEFT, BHIM Aadhaar Pay, and Tier-III full KYC Central Bank Digital Currency wallets, including P-CBDC and wholesale or cross-border CBDC. A receipt by one of those modes is not a cash receipt for this section.

Rule 6ABBA of the Income-tax Rules, 1962 listed the older set for section 269ST: credit card, debit card, net banking, IMPS, UPI, RTGS, NEFT, and BHIM Aadhaar Pay. It did not list the Central Bank Digital Currency limb. Use rule 48 for a receipt on or after 1 April 2026. Use rule 6ABBA only for a receipt that still belongs to the 1961 Act.

Who is outside section 186?

Section 186(2) keeps three classes out. A receipt by the Government, a banking company, a post office savings bank, or a co-operative bank is outside the section. A transaction of the nature referred to in section 185 is outside it, because loans, deposits and specified sums have their own rule at ₹20,000. The Central Government may also notify other persons, classes of persons, or receipts. A notification is what creates that third exclusion. A trade practice does not.

A company receiving cash from a customer is not a banking company just because the money later goes to a bank. The exclusion in section 186(2)(a) is for the receipt by the bank, the Government, the post office savings bank, or the co-operative bank. The ₹20,000 loan rule is the one to open when the sum is a loan or deposit rather than a sale or other receipt.

What penalty does section 451 set?

Section 451 says the Assessing Officer may impose a penalty equal to the sum received in contravention of section 186, except where the person proves that there were good and sufficient reasons for the contravention. The penalty tracks the amount received. A ₹2 lakh cash receipt can draw a ₹2 lakh penalty. A ₹10 lakh cash receipt can draw a ₹10 lakh penalty. It is not a flat fee, and it is not a fraction of the sum.

The escape is in section 451 itself. The person has to prove good and sufficient reasons. The section does not treat inconvenience, a buyer's preference for cash, or a split across envelopes as that proof. Under the 1961 Act the matching penalty was section 271DA, also equal to the sum received, with the same good-and-sufficient-reasons escape. Cite 451 for a section 186 receipt. Cite 271DA for a section 269ST receipt.

Which receipts still use section 269ST?

A receipt on or before 31 March 2026 still uses section 269ST of the Income-tax Act, 1961. Section 1 of the Income-tax Act, 2025 brought that Act into force on 1 April 2026. A cash receipt in February 2026 does not become a section 186 case because the notice arrives later. A cash receipt on 2 April 2026 is not saved by a template that still prints 269ST.

The tests are the same shape in both Acts: one person in a day, one transaction, one event or occasion, at ₹2 lakh or more, and a penalty equal to the sum. What you check on a live file is the date of the receipt, then the section that date selects. CBDT notifications that add an exclusion under section 186(2)(c) show up on the CBDT updates feed. Read the notification before treating a class of receipt as outside the ₹2 lakh bar.