Income Tax Act 2025: Section 186 for Tax Year 2026-27

Mode of undertaking transactions

[Section-186 as per the Income Tax Act, 2025 (this Act) w.e.f. 1st April, 2026.]

Section 186(1) of Income Tax Act 2025

186(1) No person shall receive two lakh rupees or more––

• (a) in aggregate from a person in a day; or
• (b) in respect of a single transaction; or
• (c) in respect of transactions relating to one event or occasion from a person,

except through—

• (i) an account payee cheque;
• (ii) account payee bank draft;
• (iii) electronic clearing system through a bank account; or
• (iv) any other electronic mode, as prescribed.

Section 186(2) of Income Tax Act 2025

186(2) Sub-section (1) shall not apply to—

• (a) any receipt by Government, any banking company, post office savings bank, or co-operative bank;
• (b) transactions of the nature referred to in section 185;
• (c) such other persons or class of persons or receipts, as notified by the Central Government.

FAQs on Section 186 of Income Tax Act 2025

What is the monetary limit specified under Section 186(1) for receiving money in cash?
A person is prohibited from receiving ₹2,00,000 or more in cash under the conditions specified in clauses (a), (b), or (c) of Section 186(1).

Under what conditions is receiving ₹2 lakh or more prohibited in cash?
The prohibition applies when the amount is received:

• In aggregate from a person in a day,
• In respect of a single transaction, or
• In respect of transactions relating to one event or occasion from a person.

What are the permitted modes of receiving ₹2 lakh or more as per Section 186(1)?
Permitted modes include:

• Account payee cheque,
• Account payee bank draft,
• Electronic clearing system through a bank account, or
• Any other electronic mode as prescribed.

Are there any exceptions to this provision under Section 186(2)?
Yes, Section 186(2) provides exceptions for:

• Receipts by Government, banking companies, post office savings banks, or co-operative banks,
• Transactions covered under Section 185, and
• Other persons or receipts as may be notified by the Central Government.

Does this provision apply to both individuals and businesses?
Yes, Section 186 applies to all persons unless specifically excluded under sub-section (2).

Can multiple small transactions totaling ₹2 lakh or more in a day trigger the restriction?
Yes, if the total amount received from a person in a single day equals or exceeds ₹2 lakh, the restriction under clause (a) of Section 186(1) will apply.

Is receiving cash for a wedding or similar event covered under this provision?
Yes, clause (c) of Section 186(1) covers transactions related to one event or occasion from a person, such as weddings.

What is the consequence of violating Section 186(1)?
Though Section 186 defines the prohibition, the specific consequences or penalties for violations would typically be covered under penalty provisions elsewhere in the Act.

Does this section restrict cash payments or only cash receipts?
Section 186(1) specifically restricts receiving ₹2 lakh or more in cash under the specified circumstances.