Restriction on cash receipt above Rs 2 lakhs

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Restriction on cash receipt above Rs 2 lakhs

Section 269ST of Income Tax Act 1961

No person shall receive an amount of Rs. 2.00 lakhs or more otherwise than by an account payee cheque or account payee bank draft or electronic clearing transfer system through bank accounts.

  1. In aggregate from a person in a day; or
  2. In respect of a single transaction; or
  3. In respect of transactions relating to one event or occasion from a person,These provisions will be applicable, whether the person is seller or service provider or transfer of capital assets.

Provision of section 269ST of Income Tax Act 1961 is not applicable when recipient is

  1. Government,
  2. Bank, Financial Institutions, Post Offices, Co-operative banks
  3. Any other person notified by the Government.

The Government through Notification No. 57 /2017, F.No.370142/10/2017-TPL dated 3rd July 2017 has provided that section 269ST will not apply in the following cases:

  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 authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007;
  3. receipt from an agent by an issuer of pre-paid payment instruments, in accordance with the authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 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 section 10(17A) of the Income-tax Act, 1961.

Penalty under section 271DA of Income Tax Act 1961

Any person who has received any sum in contravention of the provisions of section 269ST shall be levied penalty equal to the amount of the sum received.

Provided that the penalty shall not be levied if he proves that he has not contravened the provisions.

 The penalty under provisions of section 269ST shall be levied by the Joint Commissioner of Income Tax.

 

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