Regarding cash bills

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Rajasekaran (Querist)

09 January 2012 Sir

I am working for a jewellery manufacturers and on the eve of new year we sold gold coins to certain peoples. Now the question being they are not having bank account and we have to raise bills mostly for Rs 5 lakh and above, is there any limitation for raising cash bill, If so any procedures to be adopted for doing the same

CA Nikhil Bhansali

CA Nikhil Bhansali (Expert)

11 January 2012 There is no limitation on raising cash bills

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

20 July 2025 Great question about cash sales and large transactions in the jewellery business! Here’s the relevant info:

1️⃣ Is there a limit on cash sales bills?
As per Income Tax Rules and Prevention of Money Laundering Act (PMLA) guidelines, cash transactions of ₹2 lakh or more are restricted in many contexts.
Specifically, the Income Tax Act Section 269ST prohibits receiving cash exceeding ₹2 lakh from a single person in a day for a single transaction or related transactions.
For jewellery, cash purchases/sales above ₹2 lakh attract scrutiny and must comply with KYC and reporting norms.
2️⃣ What about sales of Rs 5 lakh or above in cash?
Such large cash sales are generally discouraged and may be subject to tax authority scrutiny.
Many jewellery businesses insist on payments via cheque, demand draft, or bank transfer for amounts above ₹2 lakh.
If customers don’t have bank accounts, it’s tricky — but it’s advisable to encourage digital or banking channel payments to avoid compliance risks.
3️⃣ Procedure to adopt if cash sale above ₹2 lakh is unavoidable:
Maintain detailed records of the customer’s identity (PAN card, Aadhaar, etc.).
Issue a properly numbered cash receipt or cash memo including full customer details.
Record the transaction in Books of Accounts with clear details.
The business must report cash transactions exceeding ₹10 lakh in a financial year under Income Tax law.
Be aware that such transactions may also be reported under PMLA if suspected to be suspicious.
4️⃣ Practical advice:
For Rs 5 lakh+ sales in cash to persons without bank accounts, consult your tax advisor to ensure full compliance.
Encourage customers to open bank accounts for safer transactions.
Consider accepting payments via banking channels to avoid violations.

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