Section 285BA- Obligation to furnish statement of financial transaction or reportable account.

(1) Any person, being—

(a) an assessee; or

(b) the prescribed person in the case of an office of Government; or

(c) a local authority or other public body or association; or

(d) the Registrar or Sub-Registrar under the Registration Act, 1908 ; or

(e) the registering authority empowered to register motor vehicles under the Motor Vehicles Act, 1988 ; or

(f) the Post Master General ; or

(g) the Collector referred to in Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 ;

or

(h) the recognized stock exchange ;

or

(i) an officer of the Reserve Bank of India ;

or

(j) a depository referred to in the Depositories Act, 1996 (22 of 1996),

(k)a prescribed reporting financial institution;

or

(l) a person, other than those referred to in clauses (a) to (k), as may be prescribed,

who is responsible for registering, or maintaining books of account or other documents containing a record of any specified financial transaction, under any law for the time being in force, shall furnish an annual information return, in respect of such specified financial transaction which is registered or recorded by him during any financial year beginning on or after the 1st day of April, 2004 and information relating to which is relevant and required for the purposes of this Act, to the prescribed income-tax authority or such other authority or agency as may be prescribed.

(2) The annual information return referred to in sub-section (1) shall be furnished within the prescribed time after the end of such financial year, in such form and manner as may be prescribed.

(3) For the purposes of sub-section (1), “specified financial transaction” means any—

(a) transaction of purchase, sale or exchange of goods or property or right or interest in a property; or

(b) transaction for rendering any service; or

(c) transaction under a works contract; or

(d) transaction by way of an investment made or an expendi­ture incurred; or

(e) transaction for taking or accepting any loan or depos­it,

Which may be prescribed:

Provided that the Board may prescribe different values for dif­ferent transactions in respect of different persons having regard to the nature of such transaction.

Note: Prior to Finance Act, 2019, reporting was to be done if value of transaction was more than 50000. Now this limit has been removed by Finance Act, 2019

(4) Where the prescribed income-tax authority considers that the annual information return furnished under sub-section (1) is defective, he may intimate the defect to the person who has furnished such return and give him an opportunity of rectifying the defect within a period of thirty days from the date of such intimation or within such further period which, on an application made in this behalf, the prescribed income-tax authority may, in his discretion, allow; and if the defect is not rectified within the said period of one month or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, such return shall be treated as an invalid return and the provisions of this Act shall apply as if such person had failed to furnish the inaccurate information in the statement

(5) Where a person who is required to furnish a statement under sub-section (1) has not furnished the same within the prescribed time, the prescribed income-tax authority may serve upon such person a notice requiring him to furnish such return within a period not exceeding thirty days from the date of service of such notice and he shall furnish the annual informa­tion return within the time specified in the notice.”.

(6) If any person, having furnished a statement under sub-section (1), or in pursuance of a notice issued under sub-section (5), comes to know or discovers any inaccuracy in the information provided in the statement, he shall within a period of ten days inform the income-tax authority or other authority or agency referred to in sub-section (1), the inaccuracy in such statement and furnish the correct information in such manner as may be prescribed.

(7) The Central Government may, by rules made under this section, specify—

(a) the persons referred to in sub-section (1) to be registered with the prescribed income-tax authority;

(b) the nature of information and the manner in which such information shall be maintained by the persons referred to in clause (a); and

(c) the due diligence to be carried out by the persons for the purpose of identification of any reportable account referred to in sub-section (1).

NOTIFIED FINANCIAL TRANSACTIONS (RULE 114E)

1. The statement of financial transaction shall be furnished in respect of a financial year in Form No. 61A and shall be verified in the manner indicated therein.

2. The statement of Financial Transactions in respect of a financial year shall be furnished by every person mentioned in column (3) of the Table below in respect of all the transactions of the nature and value specified in the corresponding entry in column (2) of the said Table, which are registered or recorded by him, namely:—

3.

Sr No.

Nature and value of transaction Class of person (reporting person)
(1) (2) (3)
1. (a) Payment made in cash for purchase of bank drafts or pay orders or banker’s cheque of an amount aggregating to 10 lakh or more in a financial year.

(b) Payments made in cash aggregating to 10 lakh or more during the financial year for purchase of pre-paid instruments issued by Reserve Bank of India under section 18 of the Payment and Settlement Systems Act, 2007.

(c) Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating to Rs 50 lakh or more in a financial year, in or from one or more current account of a person.

A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies.
2. Cash deposits aggregating to Rs 10 lakh or more in a financial year, in one or more accounts (other than a current account and time deposit) of a person. (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies

(ii) Post Master General

3. One or more time deposits (other than a time deposit made through renewal of another time deposit) of a person aggregating to Rs 10 lakh or more in a financial year of a person. (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 applies

(ii) Post Master General

(iii) Nidhi Company referred to in section 406 of the Companies Act, 2013 ;

(iv) Non-banking financial company (allowed to hold or accept deposit from public.)

4. Payments made by any person of an amount aggregating to—

(i) Rs 1 lakh or more in cash; or

(ii) Rs 10 lakh or more by any other mode

against bills raised in respect of one or more credit cards issued to that person, in a financial year.

A banking company or a co-operative bankto which the Banking Regulation Act, 1949 applies or any other companyor institution issuing credit card.
5. Receipt from any person of an amount aggregating to Rs 10 lakhor more in a financial year for acquiring bonds or debentures issued by the company or institution (other than the amount received on account of renewal of the bond or debenture issued by that company). A company or institution issuing bonds or debentures.
6. Receipt from any person of an amount aggregating to Rs10 lakh or more in a financial year for acquiring shares (including share application money) issued by the company. A company issuing shares.
7. Buy back of shares from any person (other than the shares bought in the open market) for an amount or value aggregating to ten lakh rupees or more in a financial year. A company listed on a recognised stock exchange purchasing its own securities under section 68 of the Companies Act, 2013 .
8. Receipt from any person of an amount aggregating to Rs 10 lakh or more in a financial year for acquiring units of one or more schemes of a Mutual Fund (other than the amount received on account of transfer from one scheme to another scheme of that Mutual Fund). A trustee of a Mutual Fund
9. Receipt from any person for sale of foreign currency including any credit of such currency to foreign exchange card or expense in such currency through a debit or credit card or through issue of travelers cheque or draft or any other instrument of an amount aggregating to Rs 10 lakh or more during a financial year. Authorised person as referred to in the Foreign Exchange Management Act, 1999 .
10. Purchase or sale by any person of immovable property for an amount of Rs 30 lakh or more or valued by the stamp valuation authority referred to in section 50C of the Act at Rs 30 lakh or more. Registrar or Sub-Registrar
11. Receipt of cash payment exceeding Rs 2 lakh for sale, by any person, of goods or services of any nature (other than those specified at Sl. Nos. 1 to 10 of this rule, if any.) Any person who is liable for audit under section 44AB of the Act.

*The statement of financial transactions referred to in sub-rule (1) shall be furnished on or before the 31st May, immediately following the financial year in which the transaction is registered or recorded.

*Penalty for failure to furnish Statement of Financial Transaction or Reportable Account (Section- 271A):-

If a person who is required to furnish a statement of financial transaction or reportable account under section 285BA fails to furnish such statement within the time prescribed, the prescribed income-tax authority may direct that such person shall pay, by way of penalty, a sum of Rs 500for every day during which such failure continues:

Provided that where such person fails to furnish the statement within the period specified in the notice issued under section 285BA, he shall pay, by way of penalty, a sum of Rs 1000 for every day during which the failure continues, beginning from the day immediately following the day on which the time specified in such notice for furnishing the statement expires.

MANDATORY RETURN FILING

Requirement to file ITR by persons making large cash deposits in current account New proviso to Section 139 was inserted by Finance (No.2) Act, 2019 w.e.f 01.04.2020 which provided that any person who has deposited an amount or aggregate of the amounts exceeding Rs. 1 crore in one or more current account maintained with a banking company or a cooperative bank shall be obligated to file his return of income for that previous year. It is noteworthy here that limit of Rs. 1 crore cash deposit in the current account is to be taken as person wise and not current account wise. A question arises here that whether direct cash deposits made by others such as customers, friends, relatives etc in the current account of the assessee would also be taken into account for the limit of Rs. 1 crore. Going by the spirit of the new provision, direct cash deposits by others should be counted in the depositor’s limit and not in the account holder’s limit.

High Value Cash Transactions & Mandatory Return Filing (ITR)

SECTION 13A

Exemption of Income in the hands of political Parties- Political parties which is registered with the Election Commissioner of India, are exempt from paying income tax. To avail exemption political parties are required to submit a report with Election Commissioner of India and furnish details of contribution received in excess of Rs. 20,000/- from any person. No donation of Rs. 2,000/- or more is received otherwise than by an account payee cheque/draft/use of electronic clearing system through a bank account or through electoral bonds

SEC 13B READ WITH RULE 17CA

For availing the benefit of exemption u/s 13B, an electoral Trust shall accept contributions only by way of an account payee cheque or account payee bank draft or by electronic transfer and shall not accept any contribution in cash.

PAN Card mandatory for Deposits, Withdrawals above INR 20 Lacs in a year 

CBDT has notified transactions wherein it is mandatory for a person to obtain PAN. The board has notified new Rules 114BA & 114BB and amended Rule 114. A person, depositing/withdrawing cash aggregating to Rs. 20 lakh or more in a FY, with one or more bank/post office, shall be required to apply for allotment of PAN at least 7 days before entering into such transactions. PAN is also mandatory for opening a current account or cash credit a/c

MINISTRY OF FINANCE

(Department of Revenue)

(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION

New Delhi, the 10th May, 2022

G.S.R. 346(E).––In exercise of the powers conferred by clause (vii) of sub-section (1), sub-section(6A) of section 139A, and clause (ab) of Explanation to the said section read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:- 1. Short title and commencement.–– (1)These rules may be called the Income–tax (Fifteenth Amendment) Rules, 2022

(2) Save as otherwise provided in these rules, they shall come into force after the expiry of fifteen days from the date of their publication in the Official Gazette. 2. In the Income-tax Rules, 1962,–– (a) in rule 114, in sub-rule (3), after clause (vi), the following clause shall be inserted, namely:— “(vii) in the case of a person who intends to enter into the transaction prescribed under clause (vii) of sub-section (1) of section 139A, at least seven days before the date on which he intends to enter into the said transaction.”; (b) after rule 114B, the following rule shall be inserted, namely:―“114BA. Transactions for the purposes of clause (vii) of sub-section (1) of section 139A.–– The following shall be the transactions for the purposes of clause (vii) of sub-section (1) of section 139A, namely:— (a) cash deposit or deposits aggregating to twenty lakh rupees or more in a financial year, in one or more account of a person with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act) or a Post Office; (b) cash withdrawal or withdrawals aggregating to twenty lakh rupees or more in a financial year, in one or more account of a person with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act) or a Post Office; (c) opening of a current account or cash credit account by a person with a banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act) or a Post Office.”; (c) after rule 114BA, as so inserted by the Income-tax (Fifteenth Amendment) Rules, 2022, the following rule shall be inserted after the expiry of sixty days from the date on which this notification is published in the Official Gazette, namely:— “114BB. Transactions for the purposes of sub-section (6A) of section 139A and prescribed person for the purposes of clause (ab) of Explanation to section 139A.–– (1) Every person shall, at the time of entering into a transaction specified in column (2) of the Table below, quote his permanent account number or Aadhaar number, as the case may be, in documents pertaining to such transaction, and every person specified in column (3) of the said Table, who receives such document, shall ensure that the said number has been duly quoted and authenticated—

S.No.

Nature of transaction Person
1 Cash deposit or deposits aggregating to twenty lakh rupees or more in a financial year, in one or more account of a person with, — (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Office (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).
2 Cash withdrawal or withdrawals aggregating to twenty lakh rupees or more in a financial year, in one or more account of a person with, — (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Office (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).
3 Opening of a current account or cash credit account by a person with, — (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Office (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); (ii) Post Master General as referred to in clause (j) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).

(2) The permanent account number or Aadhaar number along with demographic information or biometric information of an individual shall be submitted to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) with the approval of the Board, for the purposes of authentication referred to in section 139A.

(3) Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall lay down the formats and standards along with procedure for authentication of permanent account number or Aadhaar number.”. [Notification No. 53/2022/F.No. 370142/49/2020-TPL]

About the Book

Tax laws are a part of the dynamic laws which always keep changing.

Not only amendment but its interpretation and meaning also keeps changing, making it imperative for the taxpayers to keep a constant track of it on an ongoing basis. The book “Know When to Say No to cash Transactions” is a mobile guide for the taxpayers.

All the sections are well explained with the help of examples and illustrations. It is an attempt to keep the taxpayers updated as well as informed and provides all the information related to Presumptive taxation in summarized as well as simple manner.

In case of any doubt or query, readers are requested to approach the author at ca.rskalra@yahoo.com. Author requests for the suggestion and feedback from the readers for making it better.

Read Also:-

1 Introduction Say no to Cash Transaction- Benefits of Cashless Transactions
2 Restrictions on Expenditure (Capital & Revenue) Section 40A(3)/(3A) Restrictions on Cash Expenditure (Capital & Revenue)
3 Incentives to encourage cashless business transaction Tax Audit- Incentives to encourage cashless business transaction
4 Restrictions on Loans, Deposits& Advances Restrictions on Cash Loans, Deposits & Advances under Income Tax
5 Restrictions on cash transactions in Real Estate Restrictions on Cash Transactions in Real Estate under Income Tax
6 Disallowance of Income Tax Deductions Section 80D Deduction in respect of health insurance premia
7 Restrictions on cash transactions Rs. 2 Lacs or more Restrictions on Cash Transactions of Rs. 2 Lacs or More under Income Tax
8 Provisions of Section 269SU Section 269SU: Mandating Acceptance of Payment through prescribed Electronic modes
9 Tax Deducted At Source Provisions on Cash Transactions Section 194N TDS Provisions on Cash Transactions
10 Cash Transactions in Agriculture Sector Cash Transactions in Agriculture Sector- Income Tax Provisions
11 Cash Restrictions on Charitable Trusts Cash Transaction Restrictions on Charitable Trusts under Income Tax
12 Reporting High value Cash Transactions High Value Cash Transactions & Mandatory Return Filing (ITR)
13 Miscellaneous

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