{"id":14044,"date":"2026-05-27T07:36:49","date_gmt":"2026-05-27T07:36:49","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/section-269ss\/"},"modified":"2026-05-27T07:36:49","modified_gmt":"2026-05-27T07:36:49","slug":"section-269ss","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/section-269ss\/","title":{"rendered":"Section 269SS: Cash Transaction Limits on Loans and Deposits"},"content":{"rendered":"

Section 269SS of the Income Tax Act<\/a> places a hard limit on accepting cash for loans and deposits. It is one of the most strictly enforced provisions in Indian tax<\/a> law, with a penalty equal to 100% of the transaction amount for violations. Understanding this section is essential for individuals, businesses, and anyone who lends or borrows money, even informally.<\/p>\n

What is Section 269SS?<\/h2>\n

Section 269SS prohibits any person from accepting a loan, deposit, or advance in connection with the transfer of immovable property in cash if the amount is Rs. 20,000 or more.<\/p>\n

In plain terms: you cannot take Rs. 20,000 or more in cash as a loan, deposit, or property advance from any person. The transaction must be done through a bank (cheque, bank draft, NEFT, RTGS, IMPS, or any other electronic mode).<\/p>\n

Transactions Covered<\/h2>\n

Section 269SS applies to:<\/p>\n

– Loans taken in cash of Rs. 20,000 or more.
\n– Deposits accepted in cash of Rs. 20,000 or more.
\n– Advances received in relation to the transfer of immovable property, of Rs. 20,000 or more.<\/p>\n

The limit applies per transaction per person on a single day. It also applies in aggregate: if you accept multiple payments from the same person in cash that collectively reach or exceed Rs. 20,000 for the same loan or deposit, the section is triggered.<\/p>\n

Who is Covered?<\/h2>\n

This section applies to any person, including:<\/p>\n

– Individuals.
\n– Companies.
\n– Partnership firms.
\n– HUFs.
\n– Trusts and any other entity.<\/p>\n

There is no exception based on the nature of the taxpayer.<\/p>\n

Exemptions<\/h2>\n

Certain transactions are exempt from Section 269SS:<\/p>\n

– Loans or deposits taken from or given to the central or state government.
\n– Transactions with any banking company, cooperative bank, post office savings bank, or Life Insurance<\/a> Corporation.
\n– Transactions between government corporations as notified.
\n– Loans repaid by a person to a primary agricultural credit society or primary credit society from its members.<\/p>\n

Genuine business emergencies or transactions in areas without banking facilities do not automatically exempt the taxpayer. The law is applied strictly.<\/p>\n

Penalty Under Section 271D<\/h2>\n

If a person accepts a loan or deposit in cash in violation of Section 269SS, a penalty equal to the amount of the loan or deposit is levied under Section 271D. This is a 100% penalty on the amount involved.<\/p>\n

The penalty is imposed by the Joint Commissioner of Income Tax<\/a> and there is no upper limit on the penalty amount.<\/p>\n

Companion Section: Section 269T<\/h2>\n

Section 269T is the companion provision for repayment. It prohibits repayment of loans or deposits of Rs. 20,000 or more in cash. The same logic applies: if you borrowed Rs. 25,000, you must repay through banking channels, not cash. Violation of Section 269T also attracts a 100% penalty under Section 271E.<\/p>\n

Section 269ST<\/a>: A Broader Restriction<\/h2>\n

Section 269ST (introduced in 2017) goes further than Section 269SS. It prohibits receiving Rs. 2 lakhs or more in cash from a single person in a single day, whether for any transaction or in respect of any single event or occasion. This covers not just loans but any cash receipt, including sales and services.<\/p>\n

Practical Example<\/h2>\n

Arjun lends Rs. 30,000 in cash to his friend Vikram. Both Arjun and Vikram may face scrutiny. Arjun has given cash, and Vikram has accepted a loan in cash exceeding the Rs. 20,000 threshold. Vikram is the person “accepting” the loan and faces the Rs. 30,000 penalty under Section 271D.<\/p>\n

Key Takeaways<\/h2>\n

– Section 269SS prohibits accepting loans, deposits, or property advances in cash if the amount is Rs. 20,000 or more.
\n– Violation attracts a 100% penalty on the accepted amount under Section 271D.
\n– The section applies to all persons, with limited exemptions for government and banking entities.
\n– Section 269T covers cash repayment of loans above Rs. 20,000.
\n– Section 269ST (Rs. 2 lakh limit) is a broader restriction covering all cash receipts.
\n– No deductions or relief are available once the penalty is imposed.<\/p>\n

Always use banking channels for loans, deposits, and property advances, regardless of the relationship with the counterparty. The penalty under Section 269SS is applied strictly, with no discretion for Assessing Officers once the violation is established.<\/p>\n","protected":false},"excerpt":{"rendered":"

Section 269SS of the Income Tax Act places a hard limit on accepting cash for loans and deposits. It is one of the most strictly enforced provisions in Indian tax law, with a penalty equal to 100% of the transaction amount for violations. Understanding this section is essential for individuals, businesses, and anyone who lends […]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-14044","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"Section 269SS of the Income Tax Act places a hard limit on accepting cash for loans and deposits. It is one of the most strictly enforced provisions in Indian tax law, with a penalty equal to 100% of the transaction amount for violations. Understanding this section is essential for individuals, businesses, and anyone who lends…","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14044","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14044\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=14044"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}