cash limit

According to Section 269SS, no person can accept loan, advance or deposit other than by an account payee cheque or account payee bank draft or through electronic clearing system, if the amount of such loan exceeds Rs.20000. Even if you are not taking interest feom your friend, such loan in cash is against the Income Tax Act.Your friend would be covered under this section. However if both of you have agriculture income that is exempt from tax then you can give your friend loan of Rs.100000 in cash.If you are not having having agri. income exempt from tax or having any other income taxable under I.T.Act, 1961, then you should avoid advancing loan in Cash.

Sir what is limit of cash transaction if I have income from agriculture

If both you(Borrower and the Lender) have agricultural income and no other income taxable under the I.T.Act, 1961 then you can advance loan in cash.However, as per Section 269ST, no person can receive cash of Rs.2 Lacs in a day from a single person or relating to a particular tramsaction or event.So you may advance loan but the borrower would be covered under section 269ST.