CBDT Clarifies Imp Law On Cash Transaction Limits Imposed By Sections 269ST And 271DA

The CBDT has issued a press release dated 5th April 2017 by which it has provided important clarification regarding the restriction imposed on cash transaction by sections 269ST & 271DA inserted by the Finance Act 2017 to the Income-tax Act. These sections provide that no person (other than those specified therein) shall receive an amount of two lakh rupees or more (a) in aggregate from a person in a day; (b) in respect of a single transaction; or (c) in respect of transactions relating to one event or occasion from a person, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account. The CBDT has clarified that the said cash transaction limit of Rs 2 lakh will not apply to withdrawal from banks, cooperative bank and post offices.




Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, 5th April, 2017.

PRESS RELEASE

Budget 2017 takes Steps to discourage Cash transactions & curb Black Money

Various legislative steps have been taken by the Finance Act, 2017 to curb black money by discouraging cash transaction and by promoting digital economy.

These prominently include placing restriction on cash transaction by introduction of new sections 269ST & 271DA to the Income-tax Act. It has been provided that no person (other than those specified therein) shall receive an amount of two lakh rupees or more,

(a) in aggregate from a person in a day;
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account.

Any contravention to the said provision shall attract penalty of a sum equal to the amount of such receipt. However, the said restriction is not applicable to any receipt by Government, banking company, post office savings bank or co-operative bank. It has also been decided that the restriction on cash transaction shall not apply to withdrawal of cash from a bank, co-operative bank or a post office savings bank. Necessary notification in this regard is being issued.

It has also been provided that any capital expenditure in cash exceeding rupees ten thousand shall not be eligible for claiming depreciation allowance or investment-linked deduction. Similarly, the limit on revenue expenditure in cash has been reduced from Rs.20,000 to Rs.10,000.

In order to promote digital payments in case of small unorganized businesses, the rate of presumptive taxation has been reduced from 8% to 6% for the amount of turnover realised through cheque/digital mode.

Restriction on receipt of cash donation up to Rs. 2000 has been provided on political parties for availing exemption from Income-tax. Further, it has also mandated that any donation in cash exceeding Rs.2000 to a charitable institution shall not be allowed as a deduction under the Income-tax Act.

(Meenakshi J. Goswami)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT.


10 comments on “CBDT Clarifies Imp Law On Cash Transaction Limits Imposed By Sections 269ST And 271DA
  1. anonymous says:

    May i know the difference in cash Donation Rs 2000 limit and sec 269st RS 2,00,000

  2. Biswaranjan Dash says:

    I have sold Rs.2.80 lacs to a customer in 3 different bills against different orders all below 2 lacs on 3 different dates. If I receives more than 2 lacs cash payment from the customer on different dates all receipt are not more than 10000/- .Whether 269ST penalty is applicable on me.

  3. Priyanka says:

    Can I do online transaction,neft,account payee cheque or any such other mode of more than two lakhs rupees.Take for example I pay my lawyer a sum of rupees 4 lakhs by cheque or neft in my pending case will it be attracted to section 269st?

    • Ram Swaroop Mahawar says:

      We are a Pvt Ltd Company sold our old generator Rs. 2,10,000/-. We have received money from party by digital mode through IMPS ( Immediate Payment Services ) in many transactions.

      I want to ask you, whether 269ST penalty is applicable on us or any section of Income tax impose penalty on such kind of receipts.

      Reply

  4. Embargo in Section 269 is to receive deposit or loan. Section does not apply to:-
    (1) receipt by way of repayment of loan (against loan disbursed by the assessee/person earlier).
    (2) receipt by way of withdrawal of deposit (from deposit of the assessee/person made earlier).
    (3) loans and deposits accepted from an exempted entity such as Banking Company.
    (4) any transactions not in the nature of loans and advance.
    Therefore a person shall not accept deposits and loans in cash violating Sec. 269SS from another person which is not an exempted entity, but shall accept loan repayment against loan once given by such person and shall make withdrawal from own deposits. In other words, Sec.269SS is applicable for the transactions in the nature of acceptance of deposits and loans and not acceptance by way of loan repayment and withdrawal from own deposits.
    Further, loans and deposits shall be accepted from an exempted entity such as a Bank without the limit prescribed in Section 269SS. So is the case of acceptance of loan repayment or deposit withdrawal or any other receipts as observed above.

    Section 269 ST targets the cases of which are spared in Section 269 SS i.e. acceptance of loan repayment, deposit withdrawal and receipts other than by way of loan and deposits amounting to Rs. 2 lakhs and more. Needless to say that these transactions are outside the purview of Section 269SS.
    Proviso of Section 269 ST which states that the section does not apply to receipts by Banking Company simply means that a Banking company shall accept Rs. 2 lakhs and more by way of loan repayment and withdrawal from its own deposit with other persons. This does not mean that a person shall receive cash withdrawal of Rs. 2 lakhs or more from a Bank in contravention of provisions of Sec. 269SS.

    CBDT circular appears to be against the provisions of Sect 269ST to that extent.

  5. Deepak Soni says:

    Serious drafting errors are committed disregard of public inconvenience and harassment and then clarifications are issued. The bureaucrats are wasting time in framing stupid laws and then issuing clarifications. Draft of the amendments should have placed before the public for discussion. It is in fact not clarification but correcting the erroneous and senseless law.

  6. unfortunately, Press Release does not have a binding force on anybody.
    CBDT should issue at least a CIrcular. There is a need to clarify much more issues involved with sec 269ST

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