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.
By on 13-11-2018
BEWARE OF CASH TRANSACTIONS IN YOUR BUSINESS
GOI have banned all transactions in cash above Rs. 2 lacs from 01.04.2017. 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.
Section 269ST reads as under:
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:
Provided that the provisions of this section shall not apply to—
1. Receipt by a business correspondent on behalf of a banking company or co-operative bank, in accordance with the guidelines issued by the Reserve Bank of India;
2. Receipt by a white label automated teller machine operator from retail outlet sources on behalf of a banking company or co-operative bank, in accordance with the authorization issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 (51 of 2007);
3. Receipt from an agent by an issuer of pre-paid payment instruments, in accordance with the authorization issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 (51 of 2007);
4. Receipt by a company or institution issuing credit cards against bills raised in respect of one or more credit cards;
5. Receipt which is not includible in the total income under clause (17A) of section 10 of the Income-tax Act, 1961.
The important points to note in respect of the above are as follows:
- 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.
- RECEIVING CASH ABOVE RS. 2 LACS IN A DAY FROM A PERSON IS NOT ALLOWED:
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.
- RECEIPT EXCEEDING RS. 2 LACS FOR A SINGLE TRANSACTION IS NOT ALLOWED:
For example, if a transaction is for Rs. 7 lacs, then a single payment for such transaction cannot exceed Rs. 2 lacs.
- 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.
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