Section 269ST of the Income Tax Act 2017: Everything You Need to Know
Introduction:
In order to curb black money and promote digital transactions, the Indian government introduced Section 269ST of the Income Tax Act, 1961. The section prohibits any person from receiving an amount of Rs. 2 lakhs or more in cash in a single day, from a single person or entity. In this blog, we will discuss the various aspects of Section 269ST and its implications.
Understanding Section 269ST:
Section 269ST was introduced in the Income Tax Act, 1961 through the Finance Act, 2017. The section prohibits any person from receiving an amount of Rs. 2 lakhs or more in cash in a single day from a single person or entity. This includes any cash transaction in respect of a single transaction or multiple transactions, which are aggregated to be of Rs. 2 lakhs or more.
Implications of Section 269ST:
Section 269ST has far-reaching implications for both businesses and individuals. Some of the key implications are:
- Digital Transactions: Section 269ST encourages the use of digital transactions and discourages cash transactions. This is in line with the government’s push for a cashless economy.
- Penalty: Any person who receives an amount of Rs. 2 lakhs or more in cash in violation of Section 269ST is liable to pay a penalty equal to the amount of cash received. The penalty can be as high as Rs. 2 lakhs.
- No set-off: The penalty levied under Section 269ST cannot be set-off against any other liability. This means that the penalty must be paid separately and cannot be adjusted against any other outstanding amount.
- Exceptions: Section 269ST does not apply to certain transactions, such as receipts by the government, banks, post offices, and certain other entities. Additionally, the section does not apply to certain transactions such as payments made for agricultural produce, medical treatment, and certain other categories.
Conclusion:
Section 269ST of the Income Tax Act, 1961 was introduced to curb black money and promote digital transactions. It prohibits any person from receiving an amount of Rs. 2 lakhs or more in cash in a single day, from a single person or entity. The section has far-reaching implications for both businesses and individuals, and it is important to understand its provisions to avoid any penalties or liabilities. By promoting digital transactions, Section 269ST is an important step towards building a cashless economy.
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Frequently Asked Questions (FAQs)
Q. What is Section 269ST of the Income Tax Act, 1961? Section 269ST is a provision in the Income Tax Act, 1961 that prohibits any person from receiving an amount of Rs. 2 lakhs or more in cash in a single day, from a single person or entity.
Q. What is the penalty for violating Section 269ST? Any person who violates Section 269ST is liable to pay a penalty equal to the amount of cash received. The penalty can be as high as Rs. 2 lakhs.
Q. Does Section 269ST apply to all cash transactions? No, Section 269ST applies only to cash transactions of Rs. 2 lakhs or more in a single day, from a single person or entity. It does not apply to transactions made through digital modes.
Q. Are there any exceptions to Section 269ST? Yes, Section 269ST does not apply to certain transactions, such as receipts by the government, banks, post offices, and certain other entities. Additionally, the section does not apply to certain transactions such as payments made for agricultural produce, medical treatment, and certain other categories.
Q.Can the penalty levied under Section 269ST be set-off against any other liability? No, the penalty levied under Section 269ST cannot be set-off against any other liability. It must be paid separately and cannot be adjusted against any other outstanding amount.
Q.Why was Section 269ST introduced? Section 269ST was introduced to curb black money and promote digital transactions. By discouraging cash transactions, the provision aims to encourage the use of digital modes of payment and build a cashless economy.
Q. How can individuals and businesses avoid violating Section 269ST? Individuals and businesses can avoid violating Section 269ST by ensuring that any cash transactions do not exceed Rs. 2 lakhs in a single day, from a single person or entity. They can also promote digital modes of payment to avoid the use of cash in transactions.
