Income Tax Provisions of Cash Transaction Limit I Income Tax Provision 269ST I Cash Transaction Limit As per income Tax

Cash Transaction Limit:-

Section 269ST:-

In budget (2017-18), the govt. of India has been passed through finance Act, 2017 and
notified on 31-March-2017. On Rupees 2 lakh cash transaction limit have been provided in a
new section in Income Tax Act as Section 269ST.

Effected

With effect from 1^stapril-2017 A.Y-2018-19

Any person shall receive an amount of Rupees 2 lakh or more

1. In aggregate from a person (Individual, HUF, Partnership Firm, Limited Liability
   Partnership, Public and Private Company, Trust, any person) in a day or
2. In respect of a single transaction or
3. In respect of transactions relating to one event or occasion from a person receives the amount

any person who Receive on to a transaction of  Rupees 2 lakh or above in cash, will be liable
to a penalty of an amount equivalent to the amount of transaction.

According to Section 269ST

After Income Tax Section 269SS of the income tax act the flowing section shall be inserted, namely

269SS, no person will receive 2 lakh rupees or more. This is following –

1. In aggregate from a person (Individual, HUF, Partnership Firm, Limited Liability
   Partnership, Public and Private Company, Trust, any person) in a day: or
2. In respect of a single transaction; or
3. In respect of transactions relating to one event or occasion from a person,

Otherwise than by an account payee Cheque  or an account payee bank draft or use of
electronic clearing system through a bank account: Provided that the provisions f this section
shall not apply to-

Exceptions

Any receipt by-

     (i) Government;

    (ii) Any banking company , post office savings bank or co-operative bank;

    (iii) Transactions of the nature refer in Income Tax Section 269SS

    (iv) Any corporation established by a Central, State or Provincial Act;

     (v) Any Government company as defined in clause (45)of section 2 of the Companies Act,
2013 (18 of 2013);

    (vi) Such other institution, association or body or class of institutions, associations or
bodies which the Central      Government may, for reasons to be recorded in writing, notify in
this behalf in the Official Gazette:

Transaction of the nature referred to in section 269SS;Such other persons or class of persons
or receipts, which the central government may, by notification in the official  gazette, specify.

Explanation-for the purposes of this section,-

• Banking company- shall have the same meaning as assigned to it in clause (1) of the
  explanation to section 269SS;
• Co-operative bank- shall have the same meaning as assigned to it in clause (2) of the
  explanation to section 269SS;

Examples of applicability of Section 269ST 

(A) Example-1 -Section 269ST(Cash Received in a day):-

Mr. X  buy an Furniture for cash worth  Rupees 3,00,000.00, it is the Furniture Dealer  Mr. Y
who will have to pay the tax (penalty) of  Rupees 3,00,000.00.

Effect On Mr. X has received the payment  of Cash-3,00,000.00. this payment covered in
Section 269ST even if cash payment  above 2,00,000.00, The Assessing Authority can impose
the 100% penalty of Rs. 3,00,000.00 under section 271DA.

(B) Example-2 (Single transaction):-

Mr. X sold goods to Mr. Y vide invoice no 15 of Rs. 5,00,000 dated 05.04.2017. Mr. Y made the
payment as follows:

1,00,000 by NEFT on Dated 10-04-17

1,50,000 cash payment on Dated 18.04.17

1,00,000 Paid by Cheq. on Dated 25.04.17

1,50,000 Paid by bearer Cheq. Dated 26.04.2017

 5,00,000.(Five Lakh Rupees Only) Total

Effect On Mr. X has received the payment  of Cash-1,50,000.00+ Bearer Cheque-1,50,000.00
Total-3,00,000.00. this payment covered in Section 269ST even if cash payment/bearer
Cheque payment  above 2,00,000.00, The Assessing Authority can impose the 100% penalty
of Rs. 3,00,000.00 under section 271DA.

(C) Example-3-Section 269ST (Single event or occasion):-

Mr. X married to Mrs. Y, and on married occasion, Relatives of Mr. X and Mrs. Y gifted cash
worth amount- 3,00,000.00 on differed dates.

Effect On Mr. X and Mrs. Y  has received the payment  of Cash-3,00,000.00. this payment
covered in Section 269ST even if cash payment  above 2,00,000.00, The Assessing Authority
can impose the 100% penalty of Rs. 3,00,000.00 under section 271DA.

Important Notes

Effected – Section 269SS Effected from 1^stapril, 2017 (F.Y 2017-18)

Applicable – Section 269SS applicable to any person, Individual, HUF, Partnership Firm,
Limited Liability Partnership, Public and Private Company, Trust. Etc.

Amount Receive more Than– Rupees 200000.00

Penalty – 100% of Amount Receipt (The said penalty shall however not be levied if the person
proves that there were good and sufficient reasons for such contravention.)

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