Dhanteras Jewellery Sales: Cash Limit, PAN Rules Under IT Act 2025
October 29, 2026 · Taxation
Dhanteras jewellery sales: why INR 2 lakh in cash is barred, when PAN or Form 97 is needed, SFT reporting and 3% GST under the 2025 Act.
Here is the surprise for Dhanteras jewellery sales this year: the cash limit for jewellery purchase 2026 is crossed at exactly INR 2,00,000/-, not above it. Section 186 of the Income-tax Act, 2025, in force from April 1, 2026, bars receiving INR 2,00,000/- or more in cash from one person in a day, for one transaction, or for one event or occasion.
The section 451 penalty falls on the jeweller who receives the cash, not the customer.
This is the first Dhanteras season under the new Act and Rules; the substance is familiar, the numbers are new. The position below is as of October 29, 2026.
Cash limit for jewellery purchase 2026 at a glance
Requirement
Income-tax Act, 2025 / Rules, 2026
Old reference (1961 Act / 1962 Rules)
Trigger
Cash receipt limit
Section 186
Section 269ST
INR 2,00,000/- or more in cash
Penalty on the receiver
Section 451
Section 271DA
Equal to the cash received in breach
Permitted non-cash modes
Rule 48
Rule 6ABBA
Cards, net banking, UPI, IMPS, NEFT, RTGS, BHIM Aadhaar Pay, certain CBDC wallets
PAN on the bill
Section 262 read with rule 159, Sl. No. 16
Section 139A, rule 114B
Sale exceeding INR 2,00,000/- per transaction
Declaration without PAN
Form No. 97
Form 60
Buyer (not a company or firm) has no PAN
Statement of Form 97 declarations
Rule 160, Form No. 98
Rule 114D, Form 61
October 31 and April 30
SFT for cash sales
Section 508, rule 237, Sl. No. 12, Form No. 165
Section 285BA, rule 114E, Form 61A
Cash received exceeding INR 2,00,000/-; due May 31
Old references follow the CBDT navigator and are for orientation only.
How the INR 2 lakh cash rule works under section 186
Section 186(1) applies three tests; any one is enough for a breach.
Per person per day: one customer's cash for the day is added up, even across bills.
Per transaction: cash instalments over several days for one sale count together.
Per event or occasion: one person's payments for one wedding order are read together.
Account payee cheques and drafts, bank clearing and rule 48 modes are outside the limit.
Penalty on the jeweller under section 451
The Assessing Officer may impose a penalty equal to the sum received in breach. Cash of INR 3,50,000/- can mean a penalty of INR 3,50,000/-. No penalty is imposed if the jeweller proves there was reasonable cause for the failure (section 470).
Dhanteras jewellery sales: shop-counter do's and don'ts
Do
Don't
Total the day's cash from one customer before accepting more
Split one necklace across bills or days to stay under the limit
Move the balance to card, UPI, NEFT or cheque near the limit
Treat a relative paying cash for the same wedding order as a separate buyer
Verify PAN for any bill above INR 2,00,000/-, whatever the mode
Leave PAN blank because the customer paid by card
Take Form No. 97 only from a buyer without PAN who is not a company or firm
Accept Form No. 97 from a company or a firm
Keep Form No. 97 for six years from the end of the financial year
Treat advance cash for a booking as outside the limit
PAN for jewellery above INR 2 lakh: rule 159 and Form 97
Sl. No. 16 of rule 159(1) covers any sale of goods or services exceeding INR 2,00,000/- per transaction. The person issuing the bill must see that PAN is quoted, for card and UPI sales too.
Under rule 159(5), the seller must verify the PAN, record it and link it in any information sent to the tax department. A minor with no taxable income quotes a parent's or guardian's PAN. A buyer who has not been allotted a PAN but has an Aadhaar number may quote Aadhaar instead under section 262.
When Form No. 97 replaces PAN
Under rule 159(2)(b), a buyer who is not a company or a firm and has no PAN may give a declaration in Form No. 97. In it, the declarant states they have no PAN and that their estimated total income will be below the maximum amount not chargeable to tax.
Non-residents are excluded from Sl. No. 16 by rule 159(6)(b). The section 186 cash limit still applies to sales to non-residents.
Form No. 98: a date to watch on October 31, 2026
Under rule 160, a seller covered by Sl. No. 15 or 16 of rule 159 who is required to get accounts audited must file Form No. 98 online, listing the Form No. 97 declarations received, and must keep the Form No. 97 declarations for six years from the end of the financial year. The rule as notified refers to an audit under section 58, while the tax audit provision in the Income-tax Act, 2025 is section 63, so jewellers who are subject to tax audit should treat themselves as covered.
Declarations received up to September 30 are reported by October 31, and those received up to March 31 by April 30. Form No. 98 is filed through the Reporting Portal, and an existing Form 61 registration (ITDREIN) continues to work. Declarations received in 2025-26 or earlier are still reported in Form 61.
So declarations received from April 1 to September 30, 2026 are due on October 31, 2026.
SFT reporting by jewellers
Under section 508(1) and rule 237, Sl. No. 12, cash receipts exceeding INR 2,00,000/- for a sale go in the statement of financial transactions in Form No. 165. Jewellers liable to audit under section 63 must file it by May 31 after the financial year, so May 31, 2027 for tax year 2026-27.
A cash receipt reportable under Sl. No. 12 will usually also breach section 186, so review such entries before filing.
Late filing attracts a fee of INR 200/- per day under section 427(3), up to INR 1,00,000/-. If the statement is still not filed within the time allowed in a notice under section 508(7), a penalty of INR 1,000/- per day may be imposed under section 454, also capped at INR 1,00,000/-. Section 455 provides a penalty of INR 50,000/- for inaccurate information that is not corrected in time.
Our explainer on how GST and income tax systems flag taxpayers shows how such data is used.
GST on jewellery: 3% and making charges
Articles of jewellery under heading 7113 attract 3% GST (1.5% CGST plus 1.5% SGST, or 3% IGST) under Schedule IV of Notification No. 9/2025-Central Tax (Rate), effective September 22, 2025. CBIC's sectoral FAQ on Gems and Jewellery says the 3% applies to the total value, whether or not making charges are shown separately.
Job work on Chapter 71 goods other than diamonds attracts 5% on job charges (Notification No. 11/2017-Central Tax (Rate), as amended by Notification No. 15/2025-Central Tax (Rate)); diamond job work attracts 1.5%. The 5% and 1.5% rates apply only to job work, which under section 2(68) of the CGST Act means processing goods that belong to another registered person.
When a jeweller remakes an unregistered retail customer's own old gold and charges only for the work, the charge falls under item (vii) of serial number 26 (heading 9988), "any treatment or process on goods belonging to another person", and generally attracts 18% GST. CBIC Circular No. 126/45/2019-GST draws the same line. If the old gold is instead taken in exchange as part payment for a new ornament, that is a sale of jewellery and 3% applies to the full value of the new ornament.
Red flags at the counter
A bill of exactly INR 2,00,000/- settled in cash.
One order split across bills, days or family members, all in cash.
Form No. 97 offered by a company or a firm.
Quick self-check quiz for the counter
A customer pays INR 1,20,000/- cash for a chain and INR 90,000/- cash for earrings the same day. Allowed? No. The day's total is INR 2,10,000/-.
A bill of INR 2,40,000/- is paid fully by UPI. Is PAN needed? Yes. The bill exceeds INR 2,00,000/-.
A father pays INR 1,50,000/- cash in October and INR 1,00,000/- in November for one wedding order. Safe? No. One occasion is added up.
Key takeaways
Section 186 bars cash of INR 2,00,000/- or more from one person per day, transaction or occasion.
The section 451 penalty can equal the full cash received and falls on the jeweller, unless reasonable cause is shown under section 470.
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