University · Income Tax Act 1961

Cash Transaction Compliance Checker.

Test cash receipts, expenditure, loans and deposits against the four anti-cash Income Tax Act sections. Get penalty exposure and Form 3CD reporting clause.

Transaction

Transaction kind

Amount (₹)

Aggregation basis

Result

Applicable sectionSection 269ST

Limit₹2,00,000

Breach?✓ Yes

Penalty sectionSection 271DA

Penalty amount₹2,50,000

Breach

Section 269ST prohibits receipt of ₹2 lakh or more in cash (a) in aggregate from a person in a day; (b) in respect of a single transaction; or (c) in respect of transactions relating to one event/occasion. Penalty under Sec 271DA equal to the amount received (₹2,50,000) on the recipient.

The four anti-cash sections.

Sec 269ST — no cash receipt of ₹2 lakh or more from a person in a day / single transaction / one event. Penalty: Sec 271DA = receipt amount.
Sec 40A(3) / 40A(3A) — business expenditure in cash above ₹10,000 (₹35,000 transporter) per day per person is fully disallowed.
Sec 269SS — accepting loan / deposit of ₹20,000 or more in cash. Penalty: Sec 271D = amount accepted.
Sec 269T — repaying loan / deposit of ₹20,000 or more in cash. Penalty: Sec 271E = amount repaid.

Tax auditor reports these in Form 3CD clauses 21(d) (Sec 40A(3)), 31(ba) / 31(bb) / 31(bc) / 31(bd) (Sec 269SS / 269ST / 269T) and clause 31(a) for the full list of loans / deposits accepted > ₹20K.

On CORAA

CORAA’s Scrutiny module flags every cash entry above the four thresholds at ledger upload — auto-tags the section and Form 3CD clause. See Scrutiny, Form 3CD checklist.

JE Risk Scorer Section 188 RPT

How the four anti-cash provisions work together

The Income Tax Act 1961 contains four sections that restrict cash dealing by a wide margin: Section 269ST (cash receipts), Section 40A(3) and 40A(3A) (business cash expenditure), Section 269SS (accepting loans / deposits / specified sums in cash), and Section 269T (repayment of loans / deposits in cash). Together they implement the policy intent of pushing transactions through banking channels and reducing the black-money parallel economy.

Each section has its own threshold and its own penalty mechanism. Section 269ST attracts a penalty equal to the amount received (Section 271DA) on the recipient. Section 40A(3) attracts disallowance of the entire expenditure — not just the excess above ₹10,000 — when computing taxable business income. Section 269SS and 269T attract penalties equal to the loan or deposit (Sections 271D and 271E) on the person accepting / repaying.

The tax auditor reports these in Form 3CD. Clause 21(d) — sums payable in cash above the Section 40A(3) limit. Clause 31(a) — particulars of each loan / deposit accepted otherwise than by account-payee cheque / draft / ECS (whether above or below ₹20K). Clause 31(b)(a) / (b) / (c) / (d) — specified sums received covered by Section 269ST. Clause 31(c) — particulars of each repayment of loan / deposit / specified advance otherwise than by banking channels.

Worked example — repayment to a creditor in cash

A trader repays an unsecured loan of ₹35,000 to a related party by handing over cash on 15 March. The original loan was received by NEFT in November.

Inputs

Section applicableSection 269T (repayment)

Threshold₹20,000

Amount repaid in cash₹35,000

ModeCash (not banking)

Output

Section 269T breachYes

Penalty under Section 271E₹35,000 (equal to amount)

Form 3CD reportingClause 31(c)

Section 269T applies regardless of how the loan was originally accepted — even an NEFT-received loan must be repaid by banking channel if the amount is ₹20K or more. The recipient is liable to a penalty equal to the repayment under Section 271E. The auditor reports this in Form 3CD clause 31(c) — non-disclosure or false certification attracts a separate penalty of ₹10,000 to ₹1,50,000 under Section 271J.

Common mistakes

Treating 40A(3) as applying only to excess

When business expenditure paid in cash exceeds ₹10,000 per day per person, the ENTIRE payment is disallowed under Section 40A(3) — not just the excess above ₹10,000. A ₹15,000 cash payment leads to ₹15,000 disallowance, not ₹5,000.

Aggregating differently per section

269ST aggregates per person per day OR per single transaction OR per event/occasion (any of three triggers). 40A(3) aggregates per day per person per nature of expenditure. 269SS / 269T aggregate per loan / deposit OR aggregate from the same person. Read the section text — they're not parallel.

Missing the transporter relaxation

Section 40A(3) limit is ₹35,000 (not ₹10,000) for payments made to a person engaged in the business of plying, hiring or leasing goods carriages. Rule 6DD covers other exceptions — payments to government, banking institutions, agriculture produce sellers, etc.

Confusing 269ST recipient vs payer liability

Section 269ST penalty under Section 271DA falls on the RECEIVER of cash above ₹2 lakh — not the payer. The recipient is liable for a penalty equal to the receipt. This is often missed when planning client-side compliance.

Ignoring HUF / proprietorship implications

These sections apply to all persons including individuals and HUFs (with limited exception for individuals not carrying on business). 269SS / 269T have a carve-out where both the lender and borrower have only agricultural income, but otherwise apply broadly.

Frequently asked questions

What is Section 269ST?+

Section 269ST prohibits any person from receiving an amount of ₹2 lakh or more in cash: (a) in aggregate from a person in a day; (b) in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion. The penalty under Section 271DA is equal to the amount received. Exception: receipts by government, banking companies, post office, or any other person notified by Central Government.

What is the Section 40A(3) cash limit?+

Section 40A(3) disallows any expenditure incurred in respect of which payment is made in cash exceeding ₹10,000 per day per person (₹35,000 for payments to a person engaged in plying, hiring or leasing goods carriages). The full payment is disallowed — not just the excess. Section 40A(3A) covers subsequent year disallowance when expenditure is allowed in earlier year but paid in cash in a later year.

What are the Section 269SS and 269T limits?+

Both have a threshold of ₹20,000. Section 269SS prohibits accepting any loan, deposit or specified sum of ₹20K or more in cash. Section 269T prohibits repayment of any loan, deposit or specified advance of ₹20K or more in cash. Both must be done by account-payee cheque, account-payee draft, ECS, or prescribed electronic mode.

What is a "specified sum" under Section 269SS?+

Section 269SS Explanation defines "specified sum" as any sum of money receivable, whether as advance or otherwise, in relation to the transfer of an immovable property — whether or not the transfer takes place. This was added to capture advance receipts on property deals that were earlier outside the loan/deposit definition.

Are inter-company transactions exempt?+

No. Section 269SS / 269T / 269ST do not have a general carve-out for inter-company transactions. However, banking companies, post office savings banks, government entities, and certain notified entities are exempt under specific provisos.

What is the auditor's obligation in Form 3CD?+

Form 3CD clauses 21(d), 31(a), 31(b)(a)-(d), and 31(c) require the auditor to report all transactions covered by these sections. False certification or non-disclosure attracts penalty under Section 271J — ₹10,000 minimum, up to ₹1,50,000 per return.

Can the assessee escape penalty by showing reasonable cause?+

Section 273B provides that no penalty shall be imposable under Sections 271D, 271E, or 271DA if the person proves that there was a reasonable cause for the failure. The burden of proof is on the assessee; "ignorance of law" is generally not accepted as reasonable cause.

Does UPI / Paytm count as cash?+

No. UPI, IMPS, NEFT, RTGS, credit / debit card, Paytm and other approved electronic payment systems are NOT cash for these sections. The prescribed "electronic mode" was notified by Rule 6ABBA and includes BHIM-UPI, UPI QR Code, Aadhaar Pay, and similar.

Authoritative sources

CBDT

Sections 269ST, 40A(3), 269SS, 269T — Income Tax Act 1961 — Latest amendments via Finance Acts up to 2024. Apply to FY 2025-26 (AY 2026-27) and earlier.

Parliament

Income Tax Act 2025 — sunset of IT Act 1961 — IT Act 1961 is repealed and replaced by IT Act 2025 with effect from 1 April 2026. From FY 2026-27 onwards, refer the corresponding provisions in IT Act 2025; the substantive thresholds (cash receipt, business expenditure, loan/deposit) are largely re-enacted but section numbers change.

CBDT

Form 3CD — Income Tax Rules 1962 — Auditor reports cash transactions in Form 3CD clauses 21(d), 31(a)–(c). Non-disclosure attracts Section 271J penalty (₹10,000–₹1,50,000).

Always confirm against the latest version of the source. Regulations evolve and amendments are common.

Related calculators

JE Risk Scorer →Form 3CD checklist →Section 188 RPT →CARO clause (iii) — Loans Given →

Last reviewed: 2026-05-28 · For informational purposes only — not professional advice.