Introduced during Budget 2017, Section 269ST of the Income Tax Act, 1961, pertains to cash transactions and places restrictions on receiving cash. Under this section, receiving ₹2 Lakhs or more in a single day from one person, for a single transaction or related transactions, is prohibited.
Violating this provision can lead to penalties. This section aims to curb black money transactions and promote digital and traceable modes of financial dealings.
Under this section, parties are prohibited from receiving payments that exceed the threshold under the following scenarios:
1.In a single transaction
You cannot make a cash transaction above ₹2 Lakhs, regardless of whether it is paid in single instalment or spread over days.
2. In a single day
Section 269ST prohibits cash transactions above ₹2 Lakhs in a single day, even if each bill is under the threshold.
3. For a single event/occasion
Under this provision, one cannot make a cash transaction of or above ₹2 Lakhs for a particular event/occasion, even if the bills are created on different days.
Section 269ST is not applicable to the following individuals and entities:
Government
Post office savings bank
Banking company
Co-operative bank
Any other individuals or a class of persons/receipts specified by the government
Transactions referred to in Section 269SS
Non-compliance of Section 269ST attracts a penalty that is equal to the transaction amount that resulted in violation. This means that if you pay ₹2,65,000 in cash under any of the provisions of Section 269ST, you may be liable to pay a penalty of ₹2,65,000.
Non-compliance with Section 269ST may not incur a penalty if valid reasons for the transaction are established. However, keep in mind that the section does not specify what constitutes as a ‘good and sufficient’ reason to contravene Section 269ST.
As a result, it becomes crucial to ensure that payments against bills are done carefully and in accordance with the rules.
FAQs on Section 269ST of the Income Tax Act, 1961
When was sec 269ST introduced?
Section 269ST of the Income Tax Act, 1961, was introduced in 2017 as a means to curb black money laundering.
Did Section 269ST of the Income Tax Act replace any other sections?
No, the section did not replace any other sections and rather complements sections 269SS and 269T.
What type of transactions are excluded from the sec 269ST?
All transactions, unless specified by the government, as included in the Section 269ST.
What is the penalty of non-compliance with Section 269ST?
The penalty for non-compliance may be equivalent to the transaction amount. This means, if you receive ₹3 Lakhs, the penalty can be ₹3 Lakhs.
What is Section 269ST Circular?
Section 269ST prohibits cash transactions of ₹2 Lakhs or more, with some exceptions.
What is Section 269SS of income tax?
Section 269SS of the Income Tax Act, 1961, prohibits individuals from taking or accepting loans in cash exceeding ₹20,000, ensuring transparency and discouraging cash transactions.
What if I want to withdraw cash for my personal use?
Individuals can withdraw any amount from banks without facing penalties under Section 269ST.
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