Gift from relative in usd

Hi!

     As peir section 56(2) of the income tax act, gift received from relatives are fully exempt from tax.  but since the amount is obtained from outside india, the money has to be routed through proper banking channel or through an authorised dealer (FOREX dealer) in order to comply with FEMA.

Wil there be any penalty under FEMA or any other law, if gift has been received in hard cash i.e. not through bank?

there is no penalty under FEMA for receiving cash as gift from NRI resident. but the foreign currency can be retained by the person receiving the gift only upto a maximum limit of USD 2000 or its equivalent. if the gift amount is more than that, then such excess shall be surrendered to an  authorised dealer within 7 days from the date of such receipt and exchange it for the value of Indian Rupees.