Section 269ST of Income Tax Act

In today's digital economy, cash transactions face stricter regulations than ever before. Section 269ST of the Income Tax Act stands as a crucial regulation that limits cash dealings in India. Introduced in 2017, this provision continues to be important in 2025 as the government pushes for a more transparent financial system. The section aims to reduce black money circulation by placing a Rs. 2 lakh cap on cash transactions from a single source in one day.

For property buyers and sellers, understanding these cash limits is vital. Many homeowners use loans from trusted institutions like Bajaj Housing Finance for property purchases. But how does Section 269ST affect loan repayments and other large transactions? Can you still make cash payments for your home loan? What penalties might you face if you break these rules?

This article will explore Section 269ST in detail, examining its applicability, penalties, and exemptions. We'll also look at how this regulation affects various financial transactions, including home loans. Whether you're a business owner, a professional, or simply planning to buy property, knowing these rules will help you stay compliant.

What is 269ST of Income Tax Act?

Section 269ST of the Income Tax Act restricts receiving cash payments above Rs. 2 lakh in specific situations. The law aims to reduce black money and encourage digital payments in India. The rule applies to all individuals and businesses that receive cash.

Under this section, no person can accept cash exceeding Rs. 2 lakh:

• From a single person in one day
• In a single transaction
• For a single event or occasion

This section affects businesses, professionals, and individuals alike. The 2025 update maintains these restrictions with stricter enforcement as India pushes toward a cashless economy.

Applicability of Section 269ST on loan repayment

Section 269ST directly impacts loan repayments to financial institutions, including housing finance companies. When repaying your loan, you cannot make cash payments of Rs. 2 lakh or more in a single day.

For example, if your home loan EMI is Rs. 50,000 per month, you can pay it in cash. However, if you want to make a lump sum prepayment of Rs. 3 lakh, you must use a cheque, online transfer, or another banking channel.

This rule helps track large money movements and reduces tax evasion possibilities. For homeowners with loans, digital repayment options offer convenience while ensuring compliance. Check your loan offers from Bajaj Housing Finance today by entering your mobile number and OTP. You may already qualify for favourable interest rates with fully digital repayment options.

What is the penalty under 269ST of the Income Tax Act?

The penalty for violating Section 269ST is severe and equals the amount received in cash. For instance, if someone accepts Rs. 3 lakh in cash, they face a penalty of Rs. 3 lakh.

Key points about the penalty:

• It applies to the receiver of cash, not the payer
• The penalty equals 100% of the cash amount received
• No minimum threshold exists—the entire amount is subject to penalty
• The penalty is imposed under Section 271DA of the Income Tax Act

The tax department can discover violations through various means, including information from banks, tax audits, or third-party reporting. This makes compliance essential for all businesses and individuals.

Implications of Section 269ST

Section 269ST has far-reaching effects on how money moves in India. By limiting cash transactions, it creates a more traceable financial system. The section promotes banking channels and digital payments for large transactions.

For real estate buyers and sellers, this means property transactions must flow through banking systems. Cash payments for property purchases are effectively prohibited since they typically exceed Rs. 2 lakh.

For businesses, it means maintaining proper records of all receipts and ensuring customers pay large amounts through banking channels. Small businesses must also adapt their operations to comply with these regulations.

Home buyers benefit from reputable lenders like Bajaj Housing Finance who offer streamlined digital payment systems. Check your eligibility for a Bajaj Housing Finance Home Loan by entering your mobile number and completing OTP verification. You may already qualify for competitive interest rates.

What are the exclusions under the 269ST Income Tax Act?

While Section 269ST broadly applies to most transactions, certain exclusions exist:

• Government-related transactions
• Banking companies and post offices
• Transactions between banks
• Transactions reported to the tax department through Form 61A

These exclusions ensure essential services can function while still maintaining oversight on large cash flows. However, most regular businesses and individuals must comply with the Rs. 2 lakh limit.

For home buyers, this means your property purchase transactions will likely need to follow Section 269ST rules. Using a reputable home loan provider like Bajaj Housing Finance ensures your transactions remain compliant with all tax regulations. Their digital systems make compliance automatic.

Example of Section 269ST of Income Tax Act

Situation 1: An aggregate sum of Rs. 2 lakh or more from an individual or entity in a single day

Ram owns a furniture shop. A customer buys items worth Rs. 1.5 lakh in the morning and returns in the evening to purchase more items worth Rs. 75,000. If Ram accepts both payments in cash, he violates Section 269ST because the total from one person exceeds Rs. 2 lakh in a single day.

The solution is to accept only one payment in cash (below Rs. 2 lakh) and request a cheque or digital payment for the other amount.

Situation 2: Rs. 2 lakh or more as a single transaction

Seema sells her used car for Rs. 2.5 lakh. The buyer offers cash, but accepting this would violate Section 269ST because it exceeds Rs. 2 lakh in a single transaction.

Seema must ask the buyer to pay through a cheque, bank transfer, or other banking channels to comply with the law.

Situation 3: Rs. 2 lakh or more for an occasion or one event from a single person or entity

Raj hires a wedding planner who charges Rs. 1.8 lakh for planning and Rs. 1 lakh for decoration. Though each service costs less than Rs. 2 lakh, the total for the same event exceeds the limit. The wedding planner cannot accept the full amount in cash.

Instead, the planner should accept a bank transfer or cheque for at least part of the payment to ensure compliance.

Reasonable causes where no penalty is imposed for violation of 269T

While the law strictly enforces Section 269ST, some situations may qualify for penalty relief:

• Genuine hardship or emergency situations
• Banking services unavailability in remote areas
• Technical failures in payment systems
• Medical emergencies requiring immediate cash payments

However, these exceptions are rare and must be proven with substantial evidence. Most violations result in penalties unless extraordinary circumstances exist.

If you're planning for a home purchase, avoid these complications by using reputable financial institutions like Bajaj Housing Finance. Check your eligibility for home loan offers now by entering your mobile number and completing a simple OTP verification. You may already qualify for excellent terms.

Reporting of transactions under sections 269T

Sections 269T and 269ST work together to restrict both cash receipts and payments. Financial institutions must report cash transactions exceeding Rs. 2 lakh to tax authorities. This reporting happens through:

• Annual Information Returns (AIR)
• Statement of Financial Transactions (SFT)
• Tax audit reports for businesses

These reporting mechanisms help authorities track compliance and identify violations. For loan repayments, financial institutions maintain records of all transactions, which helps detect patterns that might indicate tax evasion.

When you choose Bajaj Housing Finance for your home loan needs, their transparent systems ensure all your transactions are properly documented and reported. Check your loan offers today by entering your mobile number followed by OTP verification.

So, is there anyone on whom this section is not applicable?

Section 269ST applies almost universally with very few exceptions. It covers:

• Individuals of all income levels
• All businesses regardless of size
• Professionals and service providers
• Farmers and agricultural traders
• Real estate transactions

The only entities specifically exempted are government bodies, banks, and post offices. Everyone else must follow the Rs. 2 lakh cash limit rule.

This universal application helps create a level playing field in the financial system and ensures consistent enforcement of the cash transaction rules. For property buyers, this means finding reliable financial partners for your transactions.

Conclusion: Making sense of Section 269ST and home financing

Section 269ST continues to be a significant regulation in 2025, ensuring transparency in financial transactions. By limiting cash receipts to Rs. 2 lakh, it has transformed how businesses and individuals handle large payments in India.

Remember that non-compliance with Section 269ST can result in hefty penalties. By choosing a trusted home loan provider, you ensure all your transactions remain within legal boundaries while enjoying the benefits of professional financial services.