Daily limit

The cash transaction law does not allow an individual to accept Rs 2 lakh or more from a single person in a day or even for the same event through different transactions in cash.

Earlier, the slab was Rs 3 lakh, and it was amended to Rs 2 lakh in March 2017. The penal section 271DA, imposes a penalty equal to the amount that was received by the receiver.

The limit does not apply to a withdrawal from bank or post office.

Immovable property

Say 'no' when you receive Rs 20,000 or more in cash for transferring immovable property (example: house) as it can lead to penalty from the tax department. Also, the receiver and not the giver will be the target of the penalty.

Donations

Donation more than Rs 2,000 to a registered trust or a political party is also a violation of the tax law. From FY 2017-18, you cannot claim tax deductions under section 80G on donations made in cash exceeding Rs 2,000.

Business

A payment of more than Rs 10,000 on a business or professional expenditure will also attract penalty. The section 43 of the income tax prohibits payments towards the acquisition of an asset for more than Rs 10,000 in cash.