There have been various restrictions on reciept/payment of money in cash. These restrictions apply according to the nature of transactions done in business/profession or in personal nature. To shift the economy to a digital era and to promote electonic payments. Here is some nature of transations in cash to understand these as per Income Tax Laws so as to avoid the varios penalties.

Regarding Business/Profession:

• Daily payment limit of Rs 10,000 for any expenses to a single person or in aggregate of payments. No allowance of enpenses if paid in cash. (Limit increased to Rs 35,000 if you are a transporter)
• Acceptance/Repayment of loan/deposit can be made if less than Rs 20,000 in cash, have to be processed by electronic mode if above or equal to Rs 20,000.. Not applicable for banking/financial companies.
• You cannot accept a payment in cash of Rs 2,00,000 or more in total from a single person in a day, Cannot be for a single transaction or multiple transactions relating to a single event. (Sec. 269ST)

Regarding Personal payments:

• To claim deduction u/s 80D (For mediclaim policy), you have to pay it in electronic mode. Deduction is not allowed if premium paid in cash. You can claim deduction up to Rs 5,000 for preventive health checkup.
• Decution u/s 80G (For donations) cannot be cliamed if payment in cash is above Rs 2,000.
• You cannot accept a payment in cash of Rs 2,00,000 or more in total from a single person in a day, Cannot be for a single transaction or multiple transactions relating to a single event. (Sec. 269ST)
•