Cash payment limit for doctors: the ₹2 lakh rule Section 186 of the Income-tax Act, 2025 (old 269ST), the penalty, and what the front desk does.

A clinic must not accept ₹2,00,000 or more in cash from one patient in a single day, against a single bill, or for one course of treatment, under section 186(1) of the Income-tax Act, 2025 (section 269ST of the 1961 Act). If it does, section 451 lets the Assessing Officer impose a penalty equal to the amount received. Anything at or above the limit has to come through an account payee cheque, an account payee draft, a bank transfer or another prescribed electronic mode such as UPI or card.

The 2025 Act came into force on 1 April 2026, so receipts from that date are tested under section 186. We give the old 1961 section in brackets because that is the number most CAs and bank staff still use.

What exactly does section 186 say?

Section 186(1) reads: "No person shall receive an amount of ₹ 200000 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; or (ii) account payee bank draft; or (iii) electronic clearing system through a bank account; or (iv) any other electronic mode, as may be prescribed."

Note the words "or more". A cash receipt of exactly ₹2,00,000 is already inside the rule. The safe ceiling for cash is ₹1,99,999 per person per day, per bill and per treatment, and in practice a desk should switch to a bank mode well before that.

Section 186(2) takes out receipts by Government, a banking company, a post office savings bank or a co-operative bank, transactions of the kind in section 185 (loans and deposits, which have their own rule), and any persons or receipts the Central Government notifies. A private clinic is none of these.

What is the penalty, and who pays it?

Section 451 of the 2025 Act (old 271DA): "The Assessing Officer may impose on a person, a penalty equal to the sum received by him in contravention of the provisions of section 186." The person who received the cash is the one penalised. For a clinic that is the doctor or the firm or company that owns it, not the patient who paid.

The penalty can equal the cash itself, so on a ₹2,40,000 package the exposure is in the same range as the fee. Whether it is counted on the whole receipt or only on the part above the line is a reading question for your CA. Do not plan around the answer; keep the cash below the limit.

Do cheques count as cash?

Only an account payee cheque or draft is outside section 186. A bearer cheque handed over the counter is not one of the permitted modes. For a doctor on the presumptive scheme there is a second reason to care. Section 58(9) says a cheque or draft "which is not account payee, shall be deemed to be the receipt in cash" for the presumptive limits, and the higher ₹75 lakh receipts limit for doctors under section 58(2), Table Sl. No. 3 applies only where cash received "does not exceed 5% of the gross receipts". Our post on income tax for doctors under the 2025 Act covers that limit.

What should the front desk do?

At most OPD desks the rule only matters for a handful of bills: procedures, packages, advance payments and families clearing dues together. A short written rule for those bills is enough.

1. Set a desk cash ceiling well under the legal line, for example ₹1,50,000 per patient per bill, and write it on the cash-counter card. The figure is the clinic's choice; the Act's line is ₹2,00,000.
2. For any bill at or above that ceiling, say the payment modes at the time of the estimate, not at discharge: UPI, card, account payee cheque or bank transfer.
3. Treat a package or a course of treatment as one transaction. If part was paid in cash earlier, add it before accepting more cash.
4. When one relative pays several family bills on the same day, add the cash across the bills. The first test counts the payer, not the patient.
5. Record the mode on every receipt (cash, UPI with reference, card, cheque number). The day's close then shows the cash share without a separate register.
6. If a patient insists on cash above the ceiling, stop and call the doctor or owner. The decision and its risk sit with them.

The daily closing sheet in our post on closing the day across cash, UPI and card gives you the per-mode totals that make this check quick.

Must a clinic accept UPI or cards?

Not under the Income-tax Act at a small clinic's size. Section 187 requires a person carrying on business or profession to provide prescribed electronic payment modes only where "total sales, turnover or gross receipts in such business or profession exceeds fifty crore rupees during the immediately preceding tax year". In practice, a clinic that wants to stay clear of section 186 on large bills needs at least one bank mode at the counter. UPI QR and card options are in our post on card machine charges for clinics.