There are various provision inserted via Finances Act to put a limit on Cash Transaction for a check on Black Money and Tax Theft, below are the following provision applicable to Assesses (Liable for Audit u/s 44 AB of the Act)

SECTION 269ST

PROVISION OF SECTION 269ST:

No person shall receive an amount of two lakh rupees or more—

(a) in aggregate from a person in a day; or

(b) in respect of a single transaction; or

(c) 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.

EXCEPTIONS provided to following entity from above Provision:

(a) Government;

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

(c) Transactions of the nature referred to in section 269SS;

(d) Such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specifies.

SECTION 285BA (FORM 61A)

SFT under Section 285BA read with Rule 114E of Income Tax Act 1961

As per section 28​5BA of the Income-tax Act, 1961 (as substituted by Finance Act, 2014 w.e.f. 01-04-2015), specified entities (Filers) are required to furnish a statement of financial transaction or reportable account (hereinafter referred to as ‘statement’) in respect of specified financial transactions or any reportable account registered/recorded/maintained by them during the financial year to the income-tax authority or such other prescribed authority.

Section 285BA of Income Tax Act 1961 cast a responsibility on the persons which are covered under rule 114E to furnish such records within the time specified.

The Rule 114E prescribed under the reporting transactions and persons that need to file such records to Director/ Joint director of Income Tax (Intelligence and Criminal Investigation)

S.no. Nature of transactions Reporting Entity
1 Receipt of cash payment by any person for sale of goods or supply of services of any nature exceeding Rs2,00,000 Any person who is liable for audit under section 44AB of the Act.

*Aggregation rule is not applicable for above transaction type i.e. Rs. 2,00,000 to be consider only for single transaction entered by Assesse in which he receive amount in Cash only.

Section 206C- Tax Collected at Source:

TCS is the Tax Collected at Source by the seller (collector) from the buyer (collectee)”. Every person, being a seller, shall collect tax at source (TCS) from the buyer of goods specified in section 206 C (1).

Finance Act, 2016 imposed TCS on sale of goods or services on receiving consideration in cash with effect from 2016, June 1. Finance Act 2016 has made the following amendments in section 206C of the Act: –

In order to reduce the quantum of cash transaction in sale of any goods and services and for curbing the flow of unaccounted money in the trading system and to bring high value transactions within the tax net, it is proposed to amend the Section 206C of Income Tax Act,1961 to provide that the seller shall collect the tax at the rate of one per cent(i.e. 1% of sale value) from the purchaser on –

– Sale of motor vehicle of the value exceeding ten lakh rupees (Where amount is received by cash, cheque or any other mode); or

– Sale in cash of any goods (other than bullion and jewellery), or providing of any services (other than payments on which tax is deducted at source under Chapter XVII-B) exceeding two lakh rupees. (Amount of consideration is received in cash or partly in cash only).

(In above even if part payment is been made in cash than TCS will be collected on Full amount)

Note: The limit of Rs.2 lakh would apply for each transaction or bill of purchase or expense separately, and therefore, though all the transactions put together for the year may exceed the limit, if each transaction of purchase or expense is below Rs.2 lakh, the provisions of TCS would not apply.

TAX AUDIT REPORT (3CD):

Clause 31 of Reporting seeking particulars of receipts or payments made in cash or cheque or bank draft (not being account payee cheque or account payee bank draft) exceeding the limit specified4 in section 269ST of the Act. Auditors require to report details of all such receipt or payment to Taxation Authority.

Clause 42 of Reporting require Form No. 61A (SFT by specified reporting persons) and Form No. 61B (Statement of Reportable Account by prescribed reporting financial institution, as per section 285BA of the Act). Auditors are require to report all those transaction, which are not reported under Form no. 61A/61B.

*****Sec 269ST will applicable when amount receive otherwise than by account payee cheque or an account bank draft or use of electronic clearing system through a bank account. However, Sec 285BA and Sec 206C (TCS provision) will be applicable on cash receipt basis only.

There is myth among various Stakeholders that the limit of Rs 2,00,000, calculated on aggregate basis. Actually it is not, 2 Lac limit as per above all Provision is to be computed majorly on single transaction basis.  

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17 Comments

  1. rahul oswal says:

    Suppose i have made to a bill of Rs 250000 to x party
    he gives me 190000 in cheque and remaining amount in cash.does it attract 269 ST

  2. Anchal Sahu says:

    Sir, if i am an assessee not liable for tax audit, whether i can receive more than 200000 for a single transaction in cash ?

  3. Krishna Murthy S says:

    If I receive an order with cash advance of Rs.50,000 and the total taxable value is Rs.3,15,000. And at the time of delivery the customer gives the amount by way of NEFT Rs.2,50,000/- and remaining amount by way cash Rs.15,000/-.
    Is this violation of Section in income tax act, is it attracts penalty.

  4. Kolliparasundaraiah says:

    Sir,
    One audit partnership firm.one partner cash invested 190000+180000 two different dates one finicial year.
    One inviduval person cash gift from father 180000+170000 two different dates.
    Provision of sec 269 St applicable or not.

  5. Harika says:

    1.If we receive cash exceeding 2 lacs on various dates pertaining to a single transaction then sec 285 BA is applicable(i.e Rs 50000 on one day & Rs 180000 on another day)
    2.If the advance is received cash for goods or sevice exceeding 2 lacs will the transaction be reported in SFT

    1. CA KALWANI says:

      First of all thanks for reading. With respect to your 1 question :- Sec 285BA provide reporting of receipt of cash payment by any person for sale of goods or supply of services of any nature exceeding Rs2,00,000 via Form 61A, Since you have received Rs 50,000 in one day and Rs 1,80,000 on second day, it will cover under sec 285BA only when provide goods or services to same person and he is going to pay an amount in cash as specified by you.
      With respect to your 2nd question:- As said above Sec 285BA will come into action when you receipt cash > 2,00,000 for sale of goods and services. whenever you received amount in advance for sale of goods or services, you definitely record Sales order for same against which you have received money. One may interpret that sales include steps of making sales i.e Sales order(SO). Hope this will clear your doubt.

    1. CA KALWANI says:

      First of all thanks for reading. Sec 269ST depicts only receipt of Amount exceeding Rs 2,00,000 from Single person in Day or for Single Transaction related to such person or relating to one event or occasion from a person. So as per your case Sec 269ST will not be applicable.

  6. AJAY KUMAR AGRAWAL says:

    NICE PRESENTATION . A QUESTION AREISE – WHETHER THE AMOUNT RECEIVED FOR TRANSFER OF IMMOVABLE PROPERTY IN LIEU OF TRANSFER OF IMOVABLE PROPERTY AT THE TIME OF EXCUTION OF SALE DEED ( NOT ADVANCE OR REFUNDABLE ADVANCE ) IN CASH FALL UNDER SECTION 269 SS OR 269 ST .

    SECONDLY SECTION 269 ST DEALS WITH SALE OF GOODS / SERVICES . WHETHER THE TRANSFER OF IMMOVABLE POPOERTY CAN BE SAID ” TRANSFER OF GOODS ” FOR THE PURPOSE OF SECTION 269 ST

    1. CA KALWANI says:

      First of all thanks for reading. With respect to cash receipt at time of sale of Immovable Property will be covered under Section 269 ST which specified as ” No person shall receive an amount of two lakh rupees or more—
      (a) in aggregate from a person in a day;
      (b) 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”.
      Since you received Amount for sale exceeding rs 2,00,000, will bring you under sec 269ST. However Sec 269ST will provide only condition of receipt exceeding rs 2,000,00 whether by way of sale of goods or services or Immovable property or in any manner.
      Also Sec 285BA require reporting of receipt of amount exceeding rs 10/30 Lac or more as the case may be, by the Inspector-General/ Registrar/ Sub-registrar under Registration Act, 1908 for purchase or sale of Immovable property.

  7. Amit Walia says:

    Provision for Section 269ST are applicable to all, why have you mentioned “below are the following provision applicable to Assesses (Liable for Audit u/s 44 AB of the Act)”
    Since information is to be provided by entities liable for Audit, but provision is applicable to all

    1. CA KALWANI says:

      Thanks for your reading. I written Article from view point of Assesses liable for Audit Under Section 44AB of Income tax, so that`s the reason use the words “below are the following provision applicable to Assesses (Liable for Audit u/s 44 AB of the Act)”. All the above specified the Statutory obligation under Direct taxes for Audit Assesses (44AB).

  8. Mayuri Patil says:

    Thank you so much for this information.
    On one side, Income Tax Act prohibits accepting cash in excess of Rs. 2,00,000 through Sec 269ST & on the other side it mandates reporting of transactions exceeding cash receipts of Rs. 2,00,000.
    Isn’t it contradictory?
    Your views please.

    1. CA KALWANI says:

      First of all thanks for reading. With respect to your query, both Section 269ST and 285BA are interlinked to each other but Sec 285BA focused only on Cash receipt only. However Sec 269ST focused on receipt otherwise than by account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account.Let suppose one assesse receipt consideration exceeding rs 2,00,000 by bearer cheque, then he will be covered under Sec 269 ST and liable to pay penalty specified under Same section. However he will not come under provision of Sec285BA . Hope this will help to clear your doubt.

  9. Mayuri Patil says:

    Thank you so much for this information.
    On one side,Income Tax Act prohibits accepting cash in excess of Rs. 2,00,000 through Sec 269ST & on the other side it mandates reporting of transactions having cash receipts exceeding Rs. 2,00,000 through Sec 285BA.
    Isn’t this contradictory?
    Your views please.

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