Section 269ST
The Finance Act of 2017 introduced Section 269ST in the Income Tax Act with effect from April of 2017. This section was implemented in order to make provisions to restrict cash transactions as the effectiveness to control black money could not be achieved by the previous sections
Section 269 of the Income Tax Act states that no person/ individual must receive an amount of INR 2 lakhs or more under the following conditions:
- In total from another person/ individual in a day. However, a person may receive an amount below INR 2 Lakhs in cash in a day from an individual.
- If an individual splits the amount into various invoices of smaller values, then the individual on the receiving end cannot accept the same.
- If an individual receives cash from multiple small and different transactions but is related to a single occasion or event, the person on the receiving end can not accept cash. However, they may do so through an account payee cheque, an account payee bank draft or the use of an electronic clearing system through a bank account
Exceptions under Section 269ST
- The provisions of Section 269ST of the Income Tax Act would not applicable to the following.
- The Government
- Any banking company
- Any post office savings bank
- Any co-operative bank
- Transactions with a nature mentioned under Section 269SS of the Income Tax Act are considered exceptions under this Section.
- Any other individual/ person or a class of persons or receipts that the Central Government may specify through the notification in the Official Gazette.
Penalties
A new Section 271DA was introduced under the Income Tax Laws and Rules. According to this Section, if an individual receives an amount in contravention to any of the provisions or rules of Section 269ST, they would be held accountable to pay a penalty of the total sum equal to the amount that was received in cash. Thus, in layman terms, the penalty amount would be 100% of the amount that was acquired in contravention of this section
