Important Keyword: Cash Transactions, Repayment of Loan, Section 269ST.
Table of Contents
What is Section 269ST?
Section 269ST of the Income Tax Act is a crucial provision aimed at curbing cash transactions to tackle black money and tax evasion. While seemingly straightforward, its implementation has presented various challenges for taxpayers in practice.
Applicability of Section 269ST
The Income Tax Act prohibits any individual from receiving an amount of INR 2 lakh or more in the following scenarios:
- In aggregate from a person in a single day.
- In respect of a single transaction.
- In respect of transactions related to one event or occasion from a person.
However, these restrictions do not apply if the payment is made via an account payee cheque, an account payee bank draft, or through the use of electronic clearing system through a bank account.
Exclusions:
It does not apply to the following entities or transactions:
- Government.
- Any banking company.
- Post office savings bank.
- Co-operative bank.
- Other persons or receipts as may be notified.
- Transactions referred to in section 269SS, which pertains to transactions involving loans from any person. These transactions are excluded from the scope.
Penalty
If any person fails to comply with section, they will be subject to the penalty specified under Section 271DA. This penalty entails paying an amount equal to the sum received in contravention.
However, there is an exception to Section 271DA. If a person can prove that there were good and sufficient reasons for the contravention, then they will not be liable for the penalty.
Read More: How is Drawing Power calculated for a Cash Credit Account?
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Official Income Tax Return filing website: https://incometaxindia.gov.in/
