Accepting over ₹2 lakh in cash? Financial advisor warns splitting payments won’t save you from tax penalty

Cash is still king in many corners of India, especially in real estate, business deals, and social functions. But crossing certain limits in cash transactions can flip that crown — and cost you everything. Financial advisors and tax experts have been raising red flags on social media, warning that large cash deals can trigger harsh penalties under Indian tax law. A recent viral post lays bare just how easy it is to break the rules — and how brutal the consequences can be.

Highlighting this, a financial advisor cautioned against large cash transactions. In a post on X (formerly Twitter), the user with the ID CA Nitin Kaushik wrote:

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“🚨 Receiving Over ₹2 Lakh in Cash? You Could Lose It ALL! 🚨 Think you can dodge tax rules by splitting payments? Think again! Under Section 269ST of the Income Tax Act, accepting ₹2 lakh or more in cash — even in parts — can attract a 100% penalty. That means you lose everything you received! 💸 🧵👇🏼”

Explaining how the law works, Kaushik detailed several examples:

“What You Need to Know:

❌ Single-day limit: Receiving ₹2 lakh+ in cash in one day? Violation.➡ Example: Get ₹1.5 lakh in the morning and ₹1 lakh in the evening? Total = ₹2.5 lakh = Full penalty!

❌ Splitting payments over days? Doesn’t help.➡ Example: Selling a plot for ₹3 lakh and taking ₹1 lakh daily for three days? Still illegal.

❌ Wedding & event expenses count as one transaction.➡ Example: ₹1.5 lakh for catering + ₹1 lakh for decorations = ₹2.5 lakh penalty!”

He underscored his point with a real-world case: 

“Real-Life Horror Story 😱 A seller received ₹5 lakh per month for six months for a property deal. Each payment was under ₹2 lakh, but the total was ₹30 lakh. Final penalty? ₹30 lakh — he lost it all!”

Kaushik wrapped up his post with clear advice:

“How to Stay Safe? ✅ Use bank transfers, UPI, or digital payments. ✅ Never accept ₹2 lakh+ in cash—no matter how it’s split. ✅ Avoid large cash transactions in business, property, or events. Many people unknowingly break this rule and pay the price. Don’t be one of them!”