In India, paying to a business in the form of cash cannot be refused. However, there are certain types of transactions or amounts that can’t be done in cash. Accepting cash worth Rs. 2 lakhs or more in total from a single person in a day or for a single occasion will lead to violation of the cash transaction law. Receiving or repaying more than Rs. 20,000 in cash for transfer of immovable property can land you in tax trouble or a penalty.
In these kinds of situations, the receiver of the cash is the one who will be responsible to pay the penalty and not the payer. All these laws are to be followed and is required by the Income Tax department to curb black money. When it comes to business transactions, paying more than Rs. 10,000 on the expenditures will need you to pay a penalty. So, it is always important to remember when to refuse cash if you want to avoid paying penalties.