Introduction: The Income Tax Act of 1961 plays a crucial role in shaping financial transactions, particularly those involving cash. This article delves into specific provisions and penalties outlined in the act to regulate and optimize cash dealings. As the financial landscape shifts towards electronic and digital transactions, these provisions aim to ensure compliance, transparency, and accountability.
Provisions of Penal Nature Setting of Thresholds for dealing in Cash
1. Taking/ Accepting certain loans, deposits and specified sums –Section 269SS
- No person shall accept in cash any loan or deposit or other specified sum if the amount (or the aggregate of the amounts) involved total(s) to Rs. 20,000/- or more.
- “Specified Sum”-> any sum of money receivable, as advance or otherwise, in relation to the transfer of an immovable property, whether the transfer takes place or not.
- The amount or the aggregate amount shall include any cash received earlier and remaining unpaid.
- The above mandate does not apply to sums as stipulated accepted from or by-
- The Government.
- A banking company, post office savings bank or cooperative bank (but not all cooperative societies whether or not involved in banking or related activities)
- A corporation established by a Central, State or Provincial Act;
- A Government company as defied in section 2(45) of the Companies Act, 2013;
- A notified institution, association or body (or class of institution, associations or bodies)
- The mandate above is also not applicable if the payer and the payee are both earning agriculture income and neither of them has any income chargeable to tax under the Income -Tax Act, 1961.
The Penal consequence of violating the mandate above: Imposition /levy on the recipient
Section 271D
Penalty = Amount taken in Cash
2. Receiving Other Amounts in Cash –Section 269ST
- No person whether assessed to tax or not– shall take (receive) in cash any amount(s) totaling Rs. 2,00,000/- or more
- In aggregate from a person in a day; or
- In respect of single transaction; or
- In respect of transactions relating to one event or occasion from a person
- The mandate as above will apply to:
- Receipt of fees by educational institutions and hospitals;
- Donations by religious institution;
- Transactions between two related persons or where both the payer and the payee are exempt from payment of tax.
- The mandate as above does not apply to:
- Any receipt by the Government or any banking company, post office savings bank or cooperative bank (but not all cooperative societies whether or not involved in banking or related activities)
- Transactions of nature referred to in section 269SS;
- Persons or class of persons or receipts as separately notified for the purposes.
The Penal consequence of violating the mandate above: Imposition /levy on the recipient
Section 271DA
Penalty = Amount taken in Cash
3. Repayment of certain Loans or Deposits –Section 269T
- No branch of a banking company or a cooperative bank;
- No other company or cooperative society; or
- No firm or other person
Will replay in cash any loan or deposit or any specified advance if the amount (or the aggregate amount) involved with the applicable interest totals Rs. 20,000/ or more.
- “Specified Advance”-> any sum of money in the nature of advance, by whatever name called, in relation to the transfer of an immovable property, whether or not the transfer has taken place.
- The aggregate amount shall include amounts held by the person in his own name or jointly with any other person on the date of such repayment.
- The mandate as above shall not apply to repayment of any loan or deposit or specified advance taken or accepted from:
- The Government.
- A banking company, post office savings bank or cooperative bank (but not all cooperative societies whether or not involved in banking or related activities)
- A corporation established by a Central, State or Provincial Act;
- A Government company as defied in section 2(45) of the Companies Act, 2013;
- A notified institution, association or body (or class of institution, associations or bodies)
The Penal consequence of violating the mandate above: Imposition /levy on the recipient
Section 271E
Penalty = Amount repaid in Cash
Conclusion: Understanding the provisions and penalties outlined in the Income Tax Act is crucial for individuals, companies, and financial institutions. These regulations not only optimize cash transactions but also contribute to the broader goals of economic consolidation, productivity, and financial security. As the financial landscape evolves, adherence to these provisions becomes imperative for a transparent and compliant financial ecosystem.
Author Bio
sir,
A Doctor it return filed provision as per sec 44ada f.y.22-23 .cash in hand rs:25 lacs as on dt:31-03-23 as per account records.
question:
assessess violation of cash on hand limit
penalty provision applicable in it act.