You finish a branding project, and the client says they will hand over the full ₹3,50,000 in cash when you meet. It sounds easy, and it feels rude to refuse. Most freelancers say yes, or they ask for a UPI transfer and discover that the app stops at a daily cap. Neither move is planned, and one of them can cost you a penalty.
The payment modes a freelancer in India can safely accept for large amounts are bank-traceable ones: an account payee cheque, NEFT, RTGS, IMPS and UPI, each with its own practical limit. Cash is the exception, because Section 269ST bars receiving ₹2 lakh or more in cash. This post sets out what each mode allows, where the limits come from, and what to say when a client offers something you should not take.
Which payment modes can you safely accept?
Account payee cheques and electronic transfers (NEFT, RTGS, IMPS and UPI) are the normal, safe way to receive client money, and none of them runs into the cash rule. Cash is the one mode with a hard legal ceiling. The practical limits on the electronic modes mostly come from your bank and the app you use, not from one national number, so the right mode depends on the amount.
The ₹2 lakh cash rule under Section 269ST
Section 269ST of the Income-tax Act, 1961 says no person may receive ₹2 lakh or more in cash from one person in a day, for a single transaction, or for transactions tied to one event or occasion. It applies to any person, so a freelancer is covered. The penalty equals the amount received and falls on the receiver, which means you, not the client. The Income Tax Department explains the rule on its mode of receipts and payments page.
The penalty is not imposed if you can show good and sufficient reasons for the cash receipt, but that exception is read narrowly, so do not plan around it. Government, banks, the post office savings bank, co-operative banks and notified persons are exempt, and a freelancer is none of those. The Income-tax Act, 2025 took effect on 1 April 2026 and renumbers many sections, so confirm the current section number with your CA before you quote it in a contract. Section 269T is a different rule, about repaying loans or deposits in cash, and it does not apply to client fees. The wider cash and crypto picture is in the guide on receiving cash or crypto as a freelancer.
Take the ₹3,50,000 branding fee from the opening. It is above the line in one go, so accepting it in cash is barred. Splitting it into ₹1,75,000 on Monday and ₹1,75,000 on Tuesday does not solve the problem, because the rule also looks at a single event or occasion, and one project is easy to read that way. That is arithmetic on the published trigger, not a ruling, so ask your CA before relying on any split.
Cheques: accept account payee, refuse bearer
An account payee cheque is a safe way to receive a large fee, and it sits outside the cash rule. Ask for it to be made out to you by name, with the account payee crossing on it. Do not accept a bearer cheque as a workaround for cash, since it is not a safe alternative. Deposit the cheque into your own account and match it to the invoice. The guide to a business bank account for freelancers covers how to set up the account that receives it.
NEFT, RTGS and IMPS: limits and which to use
For any fee above a few lakh, NEFT or RTGS is the standard choice. RTGS has a ₹2 lakh minimum and no RBI upper cap, and NEFT has no RBI maximum, so the real ceiling is whatever the sender's bank sets. Some banks set caps per channel, for example ICICI Bank publishes figures for its internet banking on its NEFT and RTGS page. If your client says a transfer failed on limit grounds, the bank cap is the usual cause, so ask them to check or to raise it.
A ₹4,50,000 fee is a good example. It is above the RTGS minimum, so a client can send it as one RTGS transfer if their bank cap allows, or as NEFT if it does not. IMPS is typically up to ₹5 lakh a transaction, though the figure depends on the bank and the channel, and some banks also set a daily total. Treat all of these as bank-dependent and confirm with the client before the due date.
UPI limits for receiving freelance payments
UPI between two individuals is capped at ₹1 lakh per day, and a bank or app can set it lower. So a ₹4,50,000 fee would take five days over UPI, which is a poor way to be paid. Use UPI for smaller invoices and advances, and ask for NEFT, RTGS or a cheque for the large ones.
You may have seen a ₹5 lakh UPI figure. From 15 September 2025, NPCI allows ₹5 lakh per transaction and ₹10 lakh a day for verified merchants in specific categories such as insurance, capital markets, travel, collections and government e-marketplace payments, as All India Radio reported. That is not a general limit for a freelancer. Banks and apps can set lower caps than these, so confirm the figure in your own UPI app before quoting it to a client. Putting a UPI ID on your invoice is covered in the guide to adding UPI to a freelance invoice.
How to ask a client to switch from cash
Ask early and make it about their books. A business client that pays more than ₹10,000 in cash a day to one person risks losing the expense deduction under Section 40A(3), which is why clients usually prefer a bank mode once they know the rule. Put the accepted modes and your account details on the invoice and in the contract before work begins.
If a client offers cash above ₹2 lakh anyway, say something short: "I can only accept ₹2 lakh or more through a bank, so please send it by NEFT, RTGS or an account payee cheque to the details on the invoice." If they want to pay from a personal UPI handle instead, the guide on clients who pay from a personal UPI has a script for that. The wider payment-side picture, including GST, is in the GST invoice guide for freelancers.
Record every payment against an invoice
Whatever mode a client uses, match it to the invoice it settles and keep the bank entry or cheque deposit slip with it. Rinto prints your UPI QR code and bank details on every invoice and lets you mark invoices paid, so you always know who owes you what. Rinto does not process or detect payments, so you mark an invoice paid yourself once the money is in your account. This post is general information, not financial or tax advice, and your bank or CA can confirm the limits that apply to you.
Frequently Asked Questions
What is the cash limit for receiving payment in India?
Under Section 269ST of the Income-tax Act, 1961, you cannot receive ₹2 lakh or more in cash from one person in a day, for a single transaction, or for transactions tied to one event or occasion. It applies to any person, including a freelancer. The penalty equals the amount received and falls on the receiver. Government, banks and a few notified persons are exempt. The Income-tax Act, 2025 took effect on 1 April 2026 and renumbers the rule, so confirm the current section number with your CA. Account payee cheques, NEFT, RTGS, IMPS and UPI are outside this rule, and clients who pay business expenses in cash above ₹10,000 a day to one person risk their deduction under Section 40A(3).
Is RTGS minimum 2 lakh and is there a maximum limit?
Yes, RTGS has a minimum of ₹2 lakh per transaction, and RBI sets no upper cap. The practical maximum comes from the sender's bank, which can set its own limit by channel or customer segment. ICICI Bank, for instance, publishes different figures for internet banking depending on the segment. NEFT has no RBI maximum either, with a minimum of ₹1. If a client says their RTGS failed, ask them to check the limit with their bank and request a higher one if needed. For amounts under ₹2 lakh, use NEFT, IMPS or UPI instead. Ask the bank for its own RTGS cap before the due date.
What is the UPI limit per day for receiving money?
For person-to-person UPI, the limit is ₹1 lakh per day, and banks or apps can set a lower cap. Since September 2025, verified merchants in specific categories (insurance, capital markets, travel, collections and government e-marketplace) can receive up to ₹5 lakh per transaction and ₹10 lakh a day, but that is not a general freelancer limit. A freelancer who gets a large fee over personal UPI will hit the daily cap quickly, so use NEFT, RTGS or an account payee cheque for big invoices. Banks and apps can set lower caps than these, so confirm the figure in your own UPI app before quoting it to a client.
Can I split a cash payment into two days to avoid 269ST?
It is risky and not worth the attempt. Section 269ST looks at the amount received in a day, in a single transaction, and for transactions tied to one event or occasion. A single project fee paid in cash instalments across two days can be read as one occasion, which brings the whole sum into the rule. The penalty equals the amount received, so a ₹3,50,000 fee taken in cash would mean a ₹3,50,000 penalty on you. The safer route is to ask the client to pay through a bank mode. Ask your CA before relying on any cash split, because the good-and-sufficient-reasons exception is read narrowly.
Can a freelancer accept an account payee cheque of more than 2 lakh?
Yes. An account payee cheque is outside Section 269ST, because that rule applies to cash. A cheque of ₹3,50,000 or more, made out to you and crossed account payee, is a normal way to receive a large fee. Do not accept a bearer cheque in its place, since it is not a safe alternative to the account payee form. Deposit it into your own bank account and record it against the invoice it settles. If a cheque does not clear, ask your bank for the return reason and take advice before you chase the client.