Section 269ST was introduced by Finance Act, 2017. The intention of the government is to ban all transactions in cash above Rs. 2 lacs from 01.04.2017. Therefore now any person who enters into a transaction above Rs. 2 lacs in cash, will be liable to a penalty of an amount equivalent to the amount of transaction.
Page Contents
- Extract of New Section 269ST–
- Important points to note in respect of Section 269ST –
- 1) The restriction is on receipt of cash and not on payment of cash above Rs. 2 lacs: Any person who receives above Rs. 2 lacs in cash will be liable to penalty equivalent to the amount received.
- 2) Receiving cash above Rs. 2 lacs in a day from a person is not allowed under Section 269ST:
- 3) Receipt exceeding Rs. 2 lacs for a single transaction is not allowed under Section 269ST:
- 4) Receipt above Rs. 2 lacs in respect of a single event or an occasion from a person:
- 5) What can be the case which is not covered under all the three circumstances?
- 6) Nature of receipt does not matter under Section 269ST:
- 7) Who are the persons and what are the transactions exempted from section 269ST?
- 8) What are the other points that should be kept in mind in respect of Section 269ST?
- 9) What are the modes of receipt which are not allowed under Section 269ST?
- 10) Section 269ST is applicable to receipts irrespective of the fact that they are with or without consideration.
- 11) What is the penalty for violating section 269ST?
Extract of New 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 or through such other electronic mode as may be prescribed:
Provided that the provisions of this section shall not apply to—
(i) any receipt by—
(a) Government;
(b) any banking company, post office savings bank or co-operative bank;
(ii) transactions of the nature referred to in section 269SS;
(iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.
Therefore, in light of the above the government has proposed to ban all types of transactions in cash above Rs. 2 lacs.
Important points to note in respect of Section 269ST –
1) The restriction is on receipt of cash and not on payment of cash above Rs. 2 lacs: Any person who receives above Rs. 2 lacs in cash will be liable to penalty equivalent to the amount received.
There is no restriction on payment of cash. However, it is to be noted that there is an existing provision for restricting cash payments above Rs. 20,000/- for business purposes. This provision has also been amended and now cash payments above Rs. 10,000/- shall not be allowed as expense in the income tax return.
2) Receiving cash above Rs. 2 lacs in a day from a person is not allowed under Section 269ST:
Receipt of more than Rs. 2 lacs from a single person in a day is not allowed even though the amount has been paid in multiple transactions during the day which are below Rs. 2 lacs.
3) Receipt exceeding Rs. 2 lacs for a single transaction is not allowed under Section 269ST:
For example, if a transaction is for Rs. 7 lacs, then a single payment for such transaction cannot exceed Rs. 2 lacs.
4) Receipt above Rs. 2 lacs in respect of a single event or an occasion from a person:
The most common example of occasion is marriage, therefore a person cannot receive more than Rs. 2 lacs in cash for such occasion from a person.
Also important to note that this limit on an occasion is not limited to per day basis therefore receipts even on various days in respect of a single event or occasion aggregating above Rs. 2 lacs is prohibited.
If the receipts are from different persons, the same would not be covered by the third circumstance, even if the same relates to a single event or occasion.
5) What can be the case which is not covered under all the three circumstances?
Receipts from same person are permitted if the same is below the specified limit and on different days. If the same is not in relation to a single transaction and/or same event/occasion.
6) Nature of receipt does not matter under Section 269ST:
Another important point to be noted in respect of the proposed new section is that the nature of receipt does not matter.
Therefore, even if a person receives a sum which is not chargeable to tax still he would be hit by the provisions of this section and would be liable to penalty.
Receipts can be anything such as proceeds of sales of goods, income of whatsoever nature – taxable or not, gifts, capital receipts, loans, advances, government grants, subsidies, encashment of bonds/securities, encashment of instruments like National Savings Certificates, proceeds of Life Insurance Policies, scholarships, sale of shares, transactions between related parties and so on.
The nature of receipt is very wide and it would be interesting to see if the government exempts any circumstances in the future.
7) Who are the persons and what are the transactions exempted from section 269ST?
The proposed section 269ST would not be applicable in following cases:
“(i) any receipt by—
(a) Government;
(b) any banking company, post office savings bank or co-operative bank;
(ii) transactions of the nature referred to in section 269SS;
(iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify”.
Therefore, if Govt. or a banking company receives any sum in contravention of this section, they would not be liable to any penalty.
Another interesting point to note is that receipt of money from a banking company is not exempted. Therefore even cash withdrawal in contravention of the above limits can be hit by the provisions of the proposed section 269ST.
8) What are the other points that should be kept in mind in respect of Section 269ST?
Some of the other relevant points to be considered are:
- It is irrelevant that the person receiving the cash has a PAN or not and whether such person is assessed to income tax or not.
- Source of income of the recipient is irrelevant and nature of receipt of such person is also irrelevant.
- This section would also apply to transactions between related persons.
- The provisions would also apply to transactions between persons who are otherwise exempt from tax.
- Restriction would apply on all persons/entities except those which are specifically exempted like banks etc. Therefore, section 269ST will be applicable on receipt of money by all persons such as individuals, HUFs, firms, companies, trusts, charitable Institutions, AOPs/ BOIs etc.
9) What are the modes of receipt which are not allowed under Section 269ST?
Some of the modes of receipt which are not allowed are cash, bearer cheque, crossed cheque, self cheque, adjustment or transfer entry in the books of account.
However, going by the literal interpretation of the section any receipt of money other than by account payee cheque or account payee draft is not allowed. Further, with effect from 01 September, 2019 this section is amended and word “or through such other electronic mode as may be prescribed” has been inserted. This means any transfers by e-payment wallets like Paytm etc will be allowed.
10) Section 269ST is applicable to receipts irrespective of the fact that they are with or without consideration.
Section 269ST is applicable to receipts irrespective of the fact that they are with or without consideration.
In case of receipts without consideration, there can be dual impact of penalty under section 269ST and under section 56 of the Income Tax Act’ 1961 in some specific cases.
11) What is the penalty for violating section 269ST?
The Govt. proposes to introduce a new section prescribing penalty for violating the provisions of section 269ST. As per this section:
(1) If a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt.
(2) The penalty will be not be levied if such person proves that there were good and sufficient reasons for the contravention.
What are good and sufficient reasons will be decided on a case to case basis by the joint commissioner as the joint commissioner has the power to levy such penalty.
Read Other Articles of CA Pratik Anand
(Republished with Amendments)
Author Bio
UNDER SECTION 269 ST THERE IS NO PENALITY ON THE PAYER.
A PUBLIC LIMITED COMPANY HAS FRAUDULENTLY FILED A CASE IN COURT CLAIMING IT HAS PAID BY CASH 86 LAKH AS ADVANCE ON PURCHASE OF PROPERTY WITHOUT ANY WRITTEN AGREEMENT IN THE YEAR 2019-2020 ON DIFFERENT DATES DURING THE YEAR THOUGH THE OPPOSITE PARTY HAS NOT RECEIVED ANY CASH. THE DIRECTORS OF THE COMPANY ARE WITH THE INTENSION TO GRAB THE PROPERTY, WHICH IN THEIR PROSPECTUS AND INA 22 THEY HAVE NOT CLAIMED THE PROPERTY IS OWNED.
3) Receipt exceeding Rs. 2 lacs for a single transaction is not allowed under Section 269ST:
For example, if a transaction is for Rs. 7 lacs, then a single payment for such transaction cannot exceed Rs. 2 lacs.
I dont think this interpretation is correct as act no where talks about “single payment”, it just says no receipt exceeding 2 lakh in respect of single transaction. Now it has not been said whether its single payment or multiple payment.
Dear sir//
I sold car @525000 can i take upto 199000. Or all amount shud be by chq/dd// etc…
Whether cash receipt limit is different in case of transportation business.
LATEST INFORMATION RELATED SUBSCRIPTION
Sir, if a person gives other person rs 3 lakhs in cash for business requirement to the second person (the receiver) for 3 or 4 days in such period the receiver dies suddenly, first person goes to court for the recovery. This condition what is the libality for the first person who gave cash.
Sir, i have a question which i am facing in two cases
case 1 – i issue three bills of amount less than 2 lac each ( say (a)1.5 lac, (b)1.7 lac, (c) 1, lac , etc ) in the name of my client in a single day . total amount of all bills is 4.2 lac . he pays everything in cash on different dates of amount say 9000 , 7000, 5000, etc comprising of total 4.2 lac with all entries less than Rs 1000 on different dates .
is it right or not and whether penalty will be applicable on us or not.
case 1 – i issue three bills of amount less than 2 lac ( say (a)1.5 lac, (b)1.7 lac, (c) 1, lac , etc ) in the name of my client in three consecutive days . total amount of all bills is 4.2 lac . he pays everything in cash on different dates of amount say 9000 , 7000, 5000, etc comprising of total 4.2 lac with all entries less than Rs 1000 on different dates .
is it right or not and whether penalty will be applicable on us or not.???
can old outstandings of rent be received in cash in the financial year 2017-18 or will it attract 269ST
kindly update the text as latest update provides that cash withdrawal from bank account is not covered in this section.
Sir,
1. Kindly confirm whether restriction of Rs 2 lakhs applies for debit card and credit card payments also since there is no specific mention of these two mode of payments .
2. Pl also clarify whether sec 269 applies to a payment received in cash for Rs 2 lakhs and the balance of Rs 3 lakhs either through cheque or debit/credit card on the same day. These payments are received in connection with an invoice raised for Rs 5 lakhs.
i am wholseller , my total cash bill per day avarge
1,00,000/-
to many cutmor,
kya muje cash bill per custmor ka proof dena padenga
SIR ONE OF DEBTOR HAS GIVEN CASH OF RS MORE THAN 2 LAKH IN F.Y. 2016-17 NOT AT THE TIME OF DEMONETISATION CAN THIS AS A COMPANY WE HAVE TO REPORT OR ANY OTHER REPORTING REQUIREMENT IS NEEDED
Hello sir cash transaction limit of 2lacs is for per transaction or for year? For ex abc is buyer he purchase avg 50k in month and his yearly purchase is more than 6lacs, than its come in 269st?
Sir,
Please tell me I am getting CASH income from home tuition Rs. 3,70,000 P.A. which is (31,000.00 P.M. aprox.) from 10 to 15 students and my FDR interest is 90,000.00 aprox.(P.A.).
My Question is for the F.Y. 2017-18
1. Can I receive CASH from 10 to 15 students Rs. 31,000.00 (P.M.).
2. Which Return file for the F.Y. 2017-18.
3. What type of record I Have to maintained.
4. Can I receive CASH above Rs. 2,00,000.00 from 10 to 15 students.
What is GST Rate against Rice Bran, Phova Bran (Beaten Rice Bran) wef 1-4-17
HOW MUCH CASH LIMIT TO SALE OF Rice Bran, Rice, Beaten Rice , Old scrap machinaries & PACKING MATERIALS PER BILL WEF 1-4-17 PLS REPLY SOON
Sir we are domestic and International educational tour operators for education institutes we are conduction educational tours for educational institutes in this case we are raising bills for school for single event and collecting cash from students it will cross 2laks limit in this case penalty is applicable?
Sir, I am distributor in itz cash company.I use to collect cash from my retailers which is more than 2 laks and same cash i deposit in my acount or company account .I am getting .15% commission. My monthly deposit is 70 to 80 laks.Should i also have to take GST no .Kindly guide me.
sir, i am trader & registered with Vat deptt. As per earlier rule business Exp limit has been reduced to 10000/- from 20000/-. I would like to asked that can i purchase business material in cash above 10000/- for further sale.
If each bill amount of 9900 Rs (3 in a month) ,paid through cash and 10000 Rs each pavment,total cash amount exceeds to 200000 Rs, whether it comes 269st
we have raised bill 560000 8th june16 and we have received 2 lakhs 8th june and 9th june 2 lakhs and 10th june 160000 it is ok sir
We have business of Amul Milk and daily cash transactions per customer goes to Rs.25000 or higher per day. We receive payment in Cash only. What is the effect as per new ammedement 2017-18 ?
Hi sir I advance cash book account in f.y.2016-2017 and closing receivable under 2 lakh cash receive in f.y.2017-18? Example : one sales bill amount is: 700000. & f.y.2016-2017 advance cash receipt is 520000 and 180000 is cash received in f.y.2017-2018
if a person purchase 2 vehicles in a single day ,can we take 199000/- from him in both two deals
Dear sir,
I’m car dealer I have a 2 units of business.
Sale and service .
For example Daily receipt Cash of different Customer under 2 Lacs and My Closing Cash book above of 2 Lacs per unit then section 269 ST will be attracted or not?
Sir,
Dealer has deposited cash in my bank account above 200,000/- in a single day. who will liable as per sec 269ST.
if i Cash deposit above 20000/- in my loan account any problem
i have a current account in sbi have withdrawn Rs.5 lacs at a time dated 10.04.17 will this transaction attract any type of penalty
Can i deposit cash of Rs.20,000/- or more per month in my saving
account as salary received.
Kindly clarify the max. limit as cash can be deposited in bank per
month as salary received.
Can i deposit cash of Rs.20,000/- or more per month in my saving
account as salary received.
Kindly clarify the max. limit as cash can be deposited in bank per
month as salary received.
Hello sir
I am retailar for mobile recharge and daily cash receipt and withdrowal 15000 and more montly avrage 300000 and more sec 26
9st aplicable mi ya not. Please tell mi.
Sir i am a retail dealer and myu transaction is only in cash.. I sale garments for cash..and some times i sale the garments on a single day for mre than 2 lacs to different persons and issued the cash bills whether 269 st attracted
Dear Sir ,
Please Clarify me that I made bill rs 10000/- in 19 bill that sum amount is rs. 190000/- is one party that will possible or not
Is cash billing allowed above rs10000?
We have done sale proceed of rs15000 cash in a single bill. Can we receive it in cash?
I withdrawal rupees 3.5 lac on 3 April 2017 from my cash credit limit. Am i guilty?
IF A TRADER SOLD THE GOODS FOR RS.250,000/- AND HE RECEIVES THE AMOUNT RS 10,000/-PER DAY, IS SECTION IS VIOLATED.
sirji there is a panic in the market what to do please advise us. we are in domestic money transfer business. co. like itz oxigen wallet smart shop i cash wallet and many more … these are the co. which has got ppi licenced from NPCI . now these co. has their own retailers and distributors, retailers collects money from customers( workers ) and distributors collects money from retailers and these money in to co. like itz oxigen wallet and i cash wallet . now for eg. lets say with average of 3000 rupees a no of 100 workers deposits money at retailers counter total 3 lakhs. in this retailers earn 1500 now npci asking not to deposit more than 199000 . in this situation what to do. ham apni dukaan band karle ya kya karen. becoz its worker wages. please guide us what to do.
jai kumar
7506098548
as per my rationale of understanding banking transactions should be kept out of the purview of the section. As withdrawal from bank is merely a withdrawal of my own money which hitherto i would have kept to myself. I might be a construction firm and i might have to make payments to labour which may amount to lacs. The payment would be made to multiple people and not a single person. What will be the remedy in such cases.
I sold my second home for rs 120000 and the party is giving full payment in cash. if a deposit all the money in the bank on same date so it would be punishable offense?
I have a five bank account. Can I withdraw cash less than two lacs rupees from my every account in one day means
From one account is Rs. 190000 from second account Is Rs. 190000/ and third account?
bill amount is 3 lakh 2 lakh paid in different days
and 1 lakh paid chq. it is applicable?
sir your cell no. please
Examp., RK & Company Sales Mallika & Co, 3 Bills
each bill amount 1 lakh so 3 bills amount 3lacks
then Mallika & co., paid each bill 1 lakh paid in three times in different days so it is applicable this penality
Sir,
I have current account in three diffrent bank , can I Withdraw 1.5 lakh each bank in singal day .
I have a small vendor who buys goods worth rs 1000from me daily and pays in cash.. His total turnover for the year is around 3.5laks assuming rs 1000 daily. Will this section apply to him? Can I continue collecting cash from him? Assuming that every sale is a new contract can this section be interpreted differently?
IF THE ONE BILL ISSUED FOR THREE LAKH, AND THE PAYMENT IS RECEIVED IN THREE DAYS EACH ONE LAKH PER DAY, IS SECTION 269ST VIOLATED.
KINDLY LET ME KNOW, THIS SECTION IS HIT, IF A TRADER SOLD THE GOODS ON DIFFERENT DATES SAY ONE LAKH EVERY DAY, FOR SEVEN DAYS, AND HE RECEIVES THE PAYMENT IN CASH LESS THAN RS, 10,000/-(TEN THOUSAND) ON DAILY BASIS. WHOLE OF THE PAYMENT IS RECEIVED IN CASH. IN SEVENTY DAYS.? KINDLY COMMENT
Regarding banks?
Cash withdrawal above 200000 from my own account will also be Penalised?
Cash transaction is banned above 2 lacs.
Is cheque crossed ,demand draft ,are also not allowed?
Then what is the mode of payment left.?