Section 269ST of the Income Tax Act was introduced in the year 2017, as a part of the government’s efforts to curb black money and promote digital payments. This section puts a restriction on the amount of cash that can be received by a person or a business entity in a single day and penalizes the violation of this rule.
Let’s take a closer look at Section 269ST and its implications.
What does Section 269ST say?
According to Section 269ST, no person can receive an amount of Rs. 2 lakhs or more in cash in a single day, in respect of a single transaction, or in respect of transactions relating to one event or occasion from a person. This applies to all transactions, whether they are related to business or not.
For instance, if you purchase a car for Rs. 3 lakhs and pay the entire amount in cash, the seller is in violation of Section 269ST.
What are the penalties for violation?
If a person receives cash in violation of Section 269ST, he or she shall be liable to pay a penalty equal to the amount of cash received. The penalty will be levied by the assessing officer of the Income Tax Department.
For example, if a person receives Rs. 2.5 lakhs in cash, the penalty amount will be Rs. 2.5 lakhs.
It’s important to note that the penalty under Section 269ST is in addition to any other penalties or taxes that may be applicable under the Income Tax Act.
What are the exceptions to Section 269ST?
There are a few exceptions to Section 269ST:
- Transactions with the government: This section does not apply to any receipt by the government, including the Reserve Bank of India, the State Bank of India, or any other bank.
- Other exceptions: This section does not apply to any receipt by any person or entity, as may be notified by the Central Government.
- Transactions that are not in the course of business: This section does not apply to any receipt of money that is not in the course of business. For instance, if you receive money from your friend or relative as a gift, it will not be covered under Section 269ST.
Why was Section 269ST introduced?
Section 269ST was introduced to promote digital payments and to curb the circulation of black money in the economy. The government’s objective was to discourage cash transactions and encourage people to move towards cashless transactions.
By imposing penalties on cash transactions of Rs. 2 lakhs or more, the government aims to increase the tax compliance among businesses and individuals, and reduce the generation of black money.
One important thing to note is that the provision applies to both individuals and businesses, and to all types of transactions, whether they are related to business or personal matters. This means that if you receive cash payments of Rs. 2 lakhs or more in a single day, you could be liable for penalties under this provision, even if the transaction is not related to your business activities.
Another important aspect of Section 269ST is that it applies to transactions related to a single event or occasion, as well as to single transactions. This means that if you receive cash payments of Rs. 2 lakhs or more in aggregate for a series of transactions related to a single event or occasion (such as a wedding or a business conference), you could still be liable for penalties under this provision.
It’s also worth noting that the penalties under Section 269ST can be quite steep. If you violate the provision, you could be subject to a penalty equal to the amount of cash received, which could be a significant amount depending on the size of the transaction. For this reason, it’s important to ensure that you comply with the provision and avoid accepting large cash payments if possible.
Finally, it’s worth considering the broader policy implications of Section 269ST. By discouraging large cash transactions, the provision aims to promote digital payments and reduce the circulation of black money in the economy. This is an important goal, as black money can have a negative impact on economic growth and can contribute to inequality and corruption. However, it’s also important to ensure that the provision does not unduly burden legitimate businesses or individuals who may need to make large cash transactions for legitimate reasons. As such, it’s important for the government to monitor the impact of the provision and make adjustments as needed to ensure that it achieves its intended goals without causing unintended harm.
Read more useful content:
- section 234e of income tax act
- section 286 of income tax act
- section 90a of income tax act
- section 40a(7) of income tax act
- section 226(3) of income tax act
- section 24 of income tax act
Frequently Asked Questions (FAQs)
Q: What is Section 269ST?
A: Section 269ST is a provision in the Income Tax Act that restricts cash transactions of Rs. 2 lakhs or more in a single day. The provision was introduced in 2017 to curb the circulation of black money in the economy.
Q: Who does Section 269ST apply to?
A: Section 269ST applies to all individuals and businesses in India, and to all types of transactions, whether they are related to business or personal matters.
Q: What transactions are covered under Section 269ST?
A: Section 269ST applies to all cash transactions of Rs. 2 lakhs or more in a single day, whether they are related to a single transaction or to transactions related to a single event or occasion.
Q: What are the penalties for violating Section 269ST?
A: If you violate Section 269ST, you could be subject to a penalty equal to the amount of cash received. The penalty will be levied by the assessing officer of the Income Tax Department.
Q: Are there any exceptions to Section 269ST?
A: Yes, there are a few exceptions to Section 269ST. For example, transactions with the government, including the Reserve Bank of India and the State Bank of India, are exempt from the provision. Additionally, the Central Government can notify other persons or entities that are exempt from the provision.
Q: What is the objective of Section 269ST?
A: The objective of Section 269ST is to promote digital payments and reduce the circulation of black money in the economy.
Q: Can I receive cash payments of less than Rs. 2 lakhs without violating Section 269ST?
A: Yes, you can receive cash payments of less than Rs. 2 lakhs without violating Section 269ST. The provision applies only to cash transactions of Rs. 2 lakhs or more in a single day.
Q: What should I do if I need to receive a large cash payment?
A: If you need to receive a large cash payment, you should consider other payment options, such as electronic transfers or cheques. If you do receive a large cash payment, make sure to keep proper records and documentation to avoid any issues with the tax authorities.
