REGARDING APPLICABILITY OF SECTION 269ST FOR CASH PAYMENTS OF SALARY

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Section 269ST of the Income Tax Act, 1961, applies to cash payments exceeding £2 lakh in a financial year, even if paid in instalments. This includes salary payments. If an employee receives more than £2 lakh in cash from a single employer within a financial year, it constitutes a violation, and a penalty under Section 271DA may be attracted. However, if payments are made monthly and each individual payment is less than £2 lakh, Section 269ST is not applicable.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)

24 October 2025 IF THE SALARY IS PAID IN CASH TO ONE PERSON OF MORE THAN 2 LAKH IN SINGLE FINANCIAL YEAR THN WHETHER SECTION 269ST SHALL BE APPLICABLE AND PENALTY U/S 271DA SHALL BE ATTRACTED?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 October 2025 In the case of a salary payment, if the total cash amount received by the employee exceeds Rs. 2 lakh, whether it is in one single day or in multiple installments for the same employment relationship, it constitutes a violation of Section 269ST. The rule applies irrespective of whether the payments relate to one or multiple months of salary; the aggregate cash received from one employer is considered for threshold determination.
So, if a salary is paid in cash exceeding Rs. 2 lakh to a single person in a financial year, the transaction falls within the purview of Section 269ST of the Income Tax Act, 1961, and penalty under Section 271DA can indeed be attracted.