What does Section 269ST Say?

The

income tax act 269ST

lays down provisions related to the restriction on cash transactions to curb black money and promote digital transactions. 

What is Section 269ST of Income Tax Act?

• Cash Transaction Limit

  : Section 269ST prohibits any person from receiving an amount of Rs. 2 lakh or more in cash in aggregate from a person in a single day or in respect of a single transaction or in respect of transactions relating to one event or occasion from a person.

• Scope of Transactions

  : The restriction under Section 269ST applies to all types of transactions, including sale of goods or services, repayment of loans, deposit of money, etc.

• Exceptions

  : There are certain exceptions to the applicability of Section 269ST, including transactions carried out through banking channels (cheque, draft, electronic clearing system, etc.), transactions exempted by the Central Government, and any other transactions notified by the Central Government.

• Penalty for Violation

  : If a person receives an amount in contravention of the provisions of Section 269ST, they shall be liable to pay a penalty equal to the amount of such receipt under Section 271DA of the Income Tax Act.

• Non-Applicability

  : Section 269ST does not apply to transactions between banks and government, transactions carried out in rural areas, or any other transactions exempted by the Central Government.

This is income tax act 269ST

section.

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As you must know black money laundering has been a concern for our country’s economy for quite some time. The government took a few initiatives like limiting cash withdrawals, the Digital India campaign, and demonetisation to curb the generation of black money. Since paper money is the main reason behind unaccounted money growing across the country, Section 269ST of IT Act was introduced to restrict cash transactions.

Under this section, cash transactions exceeding Rs. 2,00,000 are prohibited to promote the digital economy. The government introduced Section 269ST to curb tax fraud and black money in the economy. This section prohibits any individual to receive an amount of Rs. 2,00,000 or more in cash:

• In a single transaction, or

• In total from an individual in a day, or

• In respect of transactions related to one occasion or event from an individual.

After this section was introduced, HFCs and NBFCs sent several representations as to whether the limit of Rs. 2,00,000 shall apply to the entire amount of loan repayment or one instalment of such repayment.

The IT department clarified that if you’re repaying the loan to HFCs or NBFCs, the one instalment of loan repayment shall constitute a single transaction. So, if the single loan instalment amount is below Rs. 2,00,000, then you can pay it in cash. Every instalment paid for a loan should not be aggregated to determine the applicability of the Rs. 2,00,000 limit.

• Section 269ST of Income Tax Act 1961 will not apply to-

• Co-operative bank

• Post office savings bank

• Any banking company

• Government

• Other receipts/persons as may be notified

• Transactions mentioned in section 269SS (attracted when we accept a loan from any individual) will be excluded from this section’s scope.

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I hope now you know everything about Section 269ST of Income Tax Act 1961.