CA Ashish Tater

Ashish Tater

Section 269ST is considered as one of the important section which was introduced by our respected Government with the intension of restricting the Cash Transactions to curb Black Money and Tax Theft in the industry. Though this section is looking very small and simple in front end but has various different small angles which people faced in their practical life at the time of implementing this section in real life. Hence today I am coving this section through my article alongwith various practical examples for better understanding of the readers.

APPLICABLE FROM 01/04/2017
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 or through such other electronic mode as may be prescribed.

EXCEPTIONS (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, specify.

PENALTY FOR NON COMPLIANCE SECTION 271DA 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

Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.

ANALYSIS IN-DETAIL

APPLICABLE FROM
01/04/2017
APPLICABLE TO
Any person – Individual, HUF, Firm, LLP, Company, Trust…
TYPE OF RECEIPT
Any Receipt – Whether capital or revenue.
MAXIMUM CASH  RECEIPTS PERMISSIBLE
Below Rs. 2,00,000/-
PENALTY FOR CONTRAVENTION
100% of Amount Receipt
 EXAMPLES OF TRANSACTIONS COVERED
In aggregate from a person in a day
Cash Receipts on a Single Day
CUSTOMER
A
B
C
D
Bill 1
2,50,000/-
50,000/-
1,90,000/-
1,00,000/-
Bill 2
1,50,000/-
5,000/-
25,000/-
Bill 3
85,000/-
TOTAL
2,50,000/-
2,00,000/-
1,95,000/-
2,10,000/-
PENALTY
YES
YES
NO
YES
PENALTY AMT
2,50,000/-
2,00,000/-
NIL
2,10,000/-
Cash Withdrawal from bank on a Single Day
BANK
BANK A
BANK B
BANK C
Cash Withdrawal 1
50,000/-
1,95,000/-
1,00,000/-
Cash Withdrawal 2
1,50,000/-
1,10,000/-
TOTAL
2,00,000/-
1,95,000/-
2,10,000/-
PENALTY
YES
NO
YES
PENALTY AMT
2,00,000/-
NIL
2,10,000/-
Cash Receipt from Sale of Car [ Assuming Sale Value Rs. 4,00,000/- ]
PARTICULARS
CASE 1
CASE 2
CASE 3
Cash Receipts
4,00,000/-
2,00,000/-
1,00,000/-
Non-Cash Receipts
2,00,000/-
3,00,000/-
TOTAL
4,00,000/-
4,00,000/-
4,00,000/-
PENALTY
YES
YES
NO
PENALTY AMT
4,00,000/-
2,00,000/-
NIL
in respect of a single transaction
Payments received in Cash and Other than Cash
 
CUSTOMER
X
Y
Z
W
01/04/2017
Invoice Value
4,00,000/-
4,00,000/-
4,00,000/-
4,00,000/-
05/04/2017
Chq Pmt 1
1,00,000/-
1,00,000/-
1,50,000/-
2,00,000/-
10/04/2017
RTGS / NEFT
1,50,000/-
1,50,000/-
15/04/2017
Cash Pmt 1
50,000/-
1,00,000/-
70,000/-
75,000/-
20/04/2017
Cash Pmt 2
50,000/-
1,00,000/-
30,000/-
75,000/-
25/04/2017
Cash Pmt 3
50,000/-
1,00,000/-
50,000/-
 
TOTAL
4,00,000/-
4,00,000/-
4,00,000/-
4,00,000/-
 
TOTAL NON-CASH
2,50,000/-
1,00,000/-
3,00,000/-
2,00,000/-
 
TOTAL CASH
1,50,000/-
3,00,000/-
1,00,000/-
2,00,000/-
 
PENALTY
NO
YES
NO
YES
 
PENALTY AMT
NIL
3,00,000/-
NIL
2,00,000/-
in respect of transactions relating to one event or occasion from a person
IN CASE OF INDIVIDUAL (Occasion: Marriage or Any other Events)**
SITUATION
1
2
3
CASH FROM A
1,90,000/-
2,00,000/-
2,50,000/-
CASH FROM B
1,50,000/-
1,25,000/-
50,000/-
CASH FROM C
1,60,000/-
1,75,000/-
2,00,000/-
TOTAL CASH
5,00,000/-
5,00,000/-
5,00,000/-
PENALTY
NO
YES
YES
PENALTY AMT
NIL
2,00,000/-
4,50,000/-
** On plain reading of the provisions of the section, no person can receive cash of Rs. 2,00,000/- or more on one event or occasion from a person. In other words, the restriction is on per person per event / occasion.

Disclaimer: The contents of this article are for information purposes only and does not constitute advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer to relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

(Republished with Amendments by Team Taxguru)

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40 Comments

  1. Prafulla Kumar Jena says:

    I had transferred an amount of two lakhs to my wife’s account which was my retirement benefits. Now I got a message that the above will not be accepted by MSEDCL. Please let me know what does it mean.

  2. Shambhu Lal says:

    I Have a query as ……

    A automobile dealer sold 4 cars each of Rs.5 lakh in account of single customer in single days OR multiple days in a year and received Rs.1,99,000.00 cash for each vehicle in multiple date then penalty status under 269ST would be…..

  3. shinemca says:

    Going by an income tax department circular issued 04.07.17, it appears that you can repay your entire loan amount to any HFC (Housing finance company) or NBFC (Non-banking finance company) in cash provided each instalment is less than Rs 2 lakh. As per the new income tax rule introduced in the last budget, cash payments/receipts of or over Rs 2 lakh are illegal and will attract penalty.

    This rule had created confusion as to whether the rule applied to single instalment repayment of loan or to the entire repayment amount. The finance ministry issued a circular dated July 3, 2017, clarifying that the prohibition of cash payment would only apply to repayment of a single loan instalment in cash and not to the aggregate amount.

    Section 269ST was introduced in the last budget to discourage the use of large amounts of cash as a step towards controlling generation of blac ..

  4. RAJEN BANSAL says:

    DEAR SIR IF A DEALER ISSUES TAX INVOICES TO DIFFERENT CUSTOMERS ON A SINGLE DAY AND RECEIVES CASH FROM THEM THAT EXCEEDS 2 LACS AS A SUM AGGREGATE DOES IT ATTRACT PENALTY
    2.IF A DEALER ISSUES MULTIPLE TAX INVOICES OF RS180000 MULTIPLE TIMES IN A YEAR ON DIFFERENT DATES AND RECEIVED BILL TO BILL CASH NOT EXCEEDING THE THRESHOLD LIMIT DOES THIS ALSO ATTRACT PENALTY

  5. SURRINDHHARRAW says:

    Payments received in Cash and Other than Cash:

    AS PER THE GUIDELINES PER DAY CASH TRANSACTION LIMIT IS Rs. 2 LAC BUT IN THE ABOVE TABLE THERE IS A PENALTY OF AN AMOUNT BY 1 LAC IN 3 DIFFERENT DATES.

    15/04/2017

    Cash Pmt 1

    50,000/-

    1,00,000/-

    70,000/-

    75,000/-

    20/04/2017

    Cash Pmt 2

    50,000/-

    1,00,000/-

    30,000/-

    75,000/-

    25/04/2017

    Cash Pmt 3

    50,000/-

    1,00,000/-

    50,000/-

  6. sushil kumar agarwal says:

    i am a trader and in year i supply the goods to the same party in different dates and received the cash payment at out station in my bank and in a year it crosses the 2lacs , is s-269 st applicable

    1. Snehal Sukhadia says:

      Where the case has been directly deposited in the bank by the purchaser in seller’s account, in my case they have levied a penalty

  7. B D SATYANARAYANA says:

    If an individual gets rent in cash every month and the total for the year exceeds 2 Lakhs but less then 3 Lakhs What would be tax implication Under Section 269 ST

    1. K.s.rama krishna says:

      Sir,Iam take loan one person through cash cheque 3lacs
      I given a aadhar card to bank and iwill draw cash directly
      My doubt is any problem is face banker take aadhi card and given a cash tell my problem answer

  8. Arun says:

    Sir,
    Please clarify if a party(Retailer) purchase regularly from a wholesaler, all invoices are of below Rs. 1.90 lac in different dates. However the total invoice in the financial year is some Rs.3 lac, the payment are made in cash that too less then Rs. 10 thousend per day or as aginest invoice amount. In this case, there are no invoices on any single day are more than Rs. 1.5
    Lac, and no receipt of cash is more than Rs. 10 thousands in a single day. Is it permitted, or is it treated as on event, i.e., purchase of goods for sale. Please clarify.

    – See more at: https://taxguru.in/income-tax/section-269st-basic-provisions-income-tax-act.html#comment-1960543

  9. Arun says:

    Sir
    Myself is trader and i trade goods to the dealers to which we make invoice per day of some amounts 10000 / 20000 or vise versa and which are credit billing and we accept the cash against this bills after 15-20 days or minimum 7 days to which the total t’over for this dealer could exceed in a year 300000 and cash receipts for their invoices after a 7days period or 15-20 days .
    so just wanted to confirm that what would be status for multiple billing and multiple cash reciepts which are not getting cash for invoice same day or nor the 2lac transaction because some of unregistered dealers still giving cash payment against the invoice made .

  10. CA R.VENGATACHALAM says:

    SINCE THE “AGGREGATE” WORD IS NOT THERE IN CLAUSE B & C , FURTHER ALL THE CLAUSE ARE INDEPENDENT SINCE “OR” IS MENTIONED .
    I AM HAVING DOUBT IN THE EXAMPLE OF CUSTOMER Y FOR CLAUSE B. AGGREGATING OF ALL ONE MAY NOT BE NECESSARY . PL CLARIFY

  11. Ravikumar says:

    Sir,
    Please clarify if a party(Retailer) purchase regularly from a wholesaler, all invoices are of below Rs. 2 lac in different dates. However the total invoice in the financial year is some Rs.25 lac, the payment are made in cash that too less then Rs. 2 lac per day or as aginest invoice amount. In this case, there are no invoices on any single day are more than Rs. 2Lac, and no receipt of cash is more than Rs. 2 lac in a single day. Is it permitted, or is it treated as on event, i.e., purchase of goods for sale. Please clarify.

  12. Ali says:

    More then 2 lac rupees will be deposite in bank accounts if firm have 3 bank accounts and fork will get payment from person in 10000 rupees from 1 person ??

  13. Pritesh Thakkar says:

    sir in case of multiple bills if cash transaction does not exceed 2 lacs in a day but is more than 2 lacs in a financial year in such cases is it mandatory to provide pan details and buyers details to the income tax department?

    1. P V NARAYANA RAO says:

      sir
      (1) IF DIFFERENT PARTIES ARE SOLD GOODS WORTH LESS THAN RS.2 LAKHS EACH ON CASH BASIS ON A SINGLE DAY TOTALING TO RS.6 LAKHS,
      (2) IF THE SAME PARTY IS SOLD GOODS WORTH RS.1.5 LAKHS EVERY DAY & THE CASH PAYMENT IS RECEIVED ON THE FOLLOWING DAY NOT EXCEEDING RS.2 LAKHS .

      R THEY LIABLE FOR PENALTY U/S 271DA.?

      PLS CLARIFY

    2. babulal says:

      Sir please clarify if every day cash sales is more than 5 lakh a day with different unidentifiable parties and all bills are small amount between 5000 to 20000 then the above provision is applicable or not. and whether customer name is mandatory on invoice copy or not.

  14. GANDHI MOHAN BHARATI says:

    I think that it came out in Tax Guru that cash withdrawl from bank by anyone for Rs.2.00 lakhs or more will not attract penalty.
    Please clarify

    1. ASHISH TATER says:

      Yes. Section 269 ST Not Applicable in case of withdrawl from bank. The table was not removed while updating the article. My apology.

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