Can I pay a property advance in cash?

No, not beyond Rs 19,999. Any advance, loan or deposit of Rs 20,000 or more towards a property must go through a bank - cheque, draft, or electronic transfer. Taking or giving Rs 20,000 or more in cash attracts a penalty equal to the entire amount, not just the excess. Section 269SS bars cash advances/loans/deposits of Rs 20,000 or more for property transactions Section 271D penalty equals the full amount taken in cash, not just the amount above Rs 20,000 Separately, Section 269ST bars receiving Rs 2 lakh or more in cash in aggregate from one person for the full sale Applies to token money, booking amount, and part-payments, not just the final instalment Always pay/receive via bank transfer, cheque or demand draft for any meaningful property-related payment

What is the cash limit for a property token amount?

No, not beyond Rs 19,999. Any advance, loan or deposit of Rs 20,000 or more towards a property must go through a bank - cheque, draft, or electronic transfer. Taking or giving Rs 20,000 or more in cash attracts a penalty equal to the entire amount, not just the excess. Section 269SS bars cash advances/loans/deposits of Rs 20,000 or more for property transactions Section 271D penalty equals the full amount taken in cash, not just the amount above Rs 20,000 Separately, Section 269ST bars receiving Rs 2 lakh or more in cash in aggregate from one person for the full sale Applies to token money, booking amount, and part-payments, not just the final instalment Always pay/receive via bank transfer, cheque or demand draft for any meaningful property-related payment

CAPGAIN › Answers › NRI, FEMA, home loans & IBC › Can I Pay a Property Advance or Token Amount in Cash?

Can I Pay a Property Advance or Token Amount in Cash?

Short answer: No, not beyond Rs 19,999. Any advance, loan or deposit of Rs 20,000 or more towards a property must go through a bank - cheque, draft, or electronic transfer. Taking or giving Rs 20,000 or more in cash attracts a penalty equal to the entire amount, not just the excess.

Law: Sections 269SS, 271D, Income-tax Act 1961 · Authority: CBDT · Status: in force (effective 1 Apr 1961) · Checked 25 Sept 2026

What you need to know

Section 269SS bars cash advances/loans/deposits of Rs 20,000 or more for property transactions
Section 271D penalty equals the full amount taken in cash, not just the amount above Rs 20,000
Separately, Section 269ST bars receiving Rs 2 lakh or more in cash in aggregate from one person for the full sale
Applies to token money, booking amount, and part-payments, not just the final instalment
Always pay/receive via bank transfer, cheque or demand draft for any meaningful property-related payment

Who this applies to: buyers/sellers/agents

Official / primary source: incometaxindia.gov.in (government source)

The law behind it

Cash Restrictions on Property Deals - Sections 269SS, 269ST and Penalty Sections 271D/271DA

Indian tax law strictly limits cash in property deals: no more than Rs 20,000 cash can be taken as a loan, deposit or advance towards a property, and no more than Rs 2 lakh cash can be received in total from one person for a sale. Breaking either rule means a penalty equal to the entire cash amount involved.

Sections 269SS, 269ST, 271D, 271DA, Income-tax Act 1961 · in force · source

Sections 54D, 54G, 54GA (1961) - Compulsory Acquisition & Industrial Relocation Exemptions

Three narrower exemptions for industrial property: 54D for compulsorily-acquired land/building, 54G for shifting out of an urban area, 54GA for shifting specifically into an SEZ. All three continue as Sections 84, 87 and 88 under the 2025 Act.

Sections 54D, 54G, 54GA, Income-tax Act 1961 (now Sections 84, 87, 88, Income-tax Act 2025) · in force · source

Taxation of REIT/InvIT Distributions - Dividend, Interest, Rental and 'Other Income'

Money a REIT pays out to unit holders can be dividend, interest, rental income, or return of capital, and each is taxed differently. Since April 2023, the part of a payout that is really a repayment of the REIT's debt is no longer tax-free and must be taxed as 'other income' in the unit holder's hands.

Sections 10(23FC), 10(23FCA), 115UA, Income-tax Act 1961 · amended · source

Advance Tax on Capital Gains from Property

If your estimated annual tax exceeds Rs 10,000, you must pay it in instalments during the year. Since property sales are unpredictable, Section 234C waives interest on earlier instalments as long as you pay tax on the gain in the next instalment due.

Sections 208, 234C, Income-tax Act 1961 · in force · source

Work out your own numbers

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