CA Shraddha Kothari
In order to promote digitisation system in the economy, the Central Government of India is making amendments in laws in every year’s budget. Take an example of Budget of F.Y.2017-18, the government has introduced new section 269ST limiting cash transactions above Rs. 2 lakhs. There are no exceptions to this. Even gift received in cash form close relatives above Rs. 2 lakhs come under the ambit of this section. At present there are also certain other provisions which have either a cap or a complete ban on cash transactions. Here are some of those transactions and the penalty you may attract for flouting the rules:
| Sr. no. | Transactions | Sections | Cap on cash transaction | Penalty for cash transaction |
| 1 | Disallowance for cash expenditure | 40A(3) | Payment of any expenditure above Rs. 10,000 | No deduction |
| Payments for plying, hiring or leasing of goods carriage above Rs 35,000 | ||||
| 2 | Determination of actual cost of asset | 43(1) | Payment above 10,000 for purchase of asset | Such payment won’t be included in actual cost of asset (viz, No depreciation) |
| 3 | Prohibition on receiving cash | 269ST | Rs. 2,00,000 or more | 100% of amount received |
| Examples of Transactions referred to in (3): | ||||
| (a) In aggregate from a person in a day | E.g. if a person receives Rs. 2.25 lakhs in cash for 2 different bills of Rs. 1 lakhs and 1.25 lakhs. | Then also Penalty is levied of 100% of amount received. | ||
| (b) In respect of single transaction | If there is single bill of Rs. 3.10 lakhs and cash is received on different days of Rs. 1.6 lakhs and 1.5 lakhs. | Then also Penalty is levied of 100% of amount received. | ||
| (c) In respect of transactions relating to one event or occasion from a person | E.g. If marriage is one occasion and a person receives amount of Rs. 3 lakhs. | Then penalty is levied of 100% of amount received. | ||
| To whom does Section 269ST applies? | To any person receiving cash above Rs. 2,00,000/-. | |||
| For which transactions is Section 269ST not applicable? | Restrictions on cash receipt of Rs. 2 lakhs or more w.e.f. 01.04.2017 shall not apply to- | |||
| a) Government, any Banking company, post savings bank or co-operative bank; | ||||
| b) Transactions of the nature referred to in Section 269SS; | ||||
| c) Such other persons or class of persons or receipts, as may be specified by the Central Government by notification in the Official Gazette. | ||||
| 4 | Withdrawal of cash from Bank account | As per Press Release issued by Finance Ministry, Department of Revenue dtd. 05.04.2017, Cash withdrawals from Government, any Banking company, post savings bank or co-operative bank is permissible. | No contravention of the Section, hence no penalty shall be levied. | |
| 5 | Prohibition on acceptance of cash loans, deposits, etc. | 269SS | Rs. 20,000 or more | 100% of amount received |
| 6 | Prohibition on repayment of loans or deposits in cash | 269T | Rs. 20,000 or more | 100% of amount paid |
| 7 | Health Insurance premium | 80D | No cash payment allowed | No deduction |
| 8 | Investment linked deduction for capital expenditure | 35AD | Payment above Rs 10,000 for any capital expenditure | No deduction |
| 9 | Donations to certain funds and charitable institutions | 80G | Donations above Rs. 2,000 | No deduction |
| 10 | Donations for scientific research or rural development. | 80GGA | Cash donation above Rs. 10,000 | No deduction |
| 11 | Donations by companies to political parties. | 80GGB | No cash payment allowed | No deduction |
| 12 | Donations by any person to political parties | 80GGC | No cash payment allowed | No deduction |
| 13 | Dealings in cash in immovable property transactions | 269ST & 269T | Acceptance or repayment of loan, deposit or advance from any person above Rs. 20,000/- in cash | Penalty is 100% of the amount accepted or repaid. |
| (amended w.e.f. 01.06.2015) | ||||
Disclaimer: This article is only for General Public Information and not a professional advice. Please consult your legal advisor before taking any decision. We are not finanacially liable for any loss incurred by any person.
can I withdraw a cash of Rs.2lakh /monthly from my fees as construction advisors, for monthly cash expenses against multiple expenses like personal conveyance,medical /medicine purchase,travel,food expenses etc,
Nice article Shraddha
Nice article @ Shraddha Kothari
Hello shradha.thank you so much for sharing the article.
Kindly tell is it possible to receive and pay cash against multiple bills each bill being less than 200000 and each payment being less than 10000 ..between same persons.
Thanks.
Section 269 ST covered precisely. Good informative table about the aspect of Rs.2 Lakhs and above transactions. Good Job.
Assuming i am a trader ,can i purchase good upto 200000 in single day for a single person. And dose section 269st speak about signle day or whole year
I have confusion why some sites telling 269st limit Rs 2 Lacs whereas in the budget is says Rs 3 Lakhs and i have read other articles on your site also it is also conflicting. please remove the incorrect information your other post article url is https://taxguru.in/income-tax/sec-269st-cash-receipt-danger.html
as in the budget it is saying Rs 3 Lakhs Pdf link is here indiabudget.nic.in/ub2017-18/memo/memo.pdf
Please give link of press release dated 05.04.2017 as change in transaction limit.
In village marriages, individuals pay from Rs.10/- to Rs.1,000/- as gift to the Bride or the Groom. If the total cash received exceeds Rs.2.00 lakhs is it punishable?
Informative and all at one place
4 Withdrawal of cash from Bank account As per Press Release issued by Finance Ministry, Department of Revenue dtd. 05.04.2017, Cash withdrawals from Government, any Banking company, post savings bank or co-operative bank is permissible. No contravention of the Section, hence no penalty shall be levied. – -income-tax-provisions-entering-cash-transactions.
kindly elaborate – about withdraw from government ——- what about Deposit more than two lac in govt sect.
Great initiative Shraddha..Keep guiding us..!
Very informative article.
can we receive below Rs.10000/- daily(number of days in the whole year) from single buyer against our one single sale Bill or against number of sale bills ?
I am grain merchant . Can I pay in cash more than 2 lakh to a single farmer ?
I am asking bcs of 269SS .
Exemptions from section 269SS: The Following persons are exempted from the purview of section 269SS:
a) Government ;
(b) any banking company, post office savings bank or co-operative bank ;
(c) any corporation established by a Central, State or Provincial Act ;
(d) any Government company as defined in section 617 of the Companies Act, 1956
(e) other notified insititutions
(f) where the depositor and the acceptor are both having agricultural income and neither of them have any taxable income.
Nice article??
How much maximum amount can receive in cash donation by NGO
Nice article
Whosover is writing on these aspects always forget to mention the time!