Prohibition of certain cash transactions under IT Act

This article is intended to discuss the salient features of Section 269 SS, 269 ST and 269 T of the Income Tax Act which prohibit certain cash transactions.

 Legislative Intent of the Sections – The very purpose of the introduction of these sections is to counteract evasion of tax as is evident from the heading of this Chapter i.e. Chapter XX-B

“REQUIREMENT AS TO MODE OF ACCEPTANCE, PAYMENT OR REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX”

Applicability of the SectionsThese sections are applicable to all persons as defined in Section 2(31) of the Act which include ‘Individuals, HUF, Companies, Firms, Local Authorities, AOP (whether registered or not), Every Artificial Juridical Persons’

Sections in brief –

Sl. No. Particulars Section 269 SS Section 269 ST Section 269 T
1. Transactions covered Acceptance of loan or deposit or sale proceeds from an immovable property All transactions other than covered under Section 269 SS Repayment of

a. loan or

b. deposit or

c. any advance received in relation to transfer of immovable property

2. Restrictions Receipts out of the above transactions should not be made otherwise than by A/c Payee Cheques or Direct Bank Transfer or other prescribed electronic modes such as Credit Card, Debit Card, IMPS, UPI, BHIM, etc..(Rule 6BBA) Receipts out of the above transactions should not be made otherwise than by A/c Payee Cheques or Direct Bank Transfer or other prescribed electronic modes such as Credit Card, Debit Card, IMPS, UPI, BHIM, etc..(Rule 6BBA) Payment towards the above transactions should not be made otherwise than by A/c Payee Cheques or Direct Bank Transfer or other prescribed electronic modes such as Credit Card, Debit Card, IMPS, UPI, BHIM, etc..(Rule 6BBA)
3. Limits This section is applicable only if the amount accepted from a person including the unpaid balance to that person

Is Rs. 20,000 or more

This section is applicable only if receipts

a. from a person in a day or

b. in respect of a single transaction or

c. in respect of a single event or occasion

is Rs. 2,00,000 or more

This section is applicable only if repayment along with interest including the amount payable to that person is Rs. 20,000 or more
4. Exemptions This section is not applicable for the receipts by

a. Government

b. Banks

c. Corporation

d. Government Company

e. Other Notified Institutions

f. a person having agricultural income from a person who also has agricultural income and both the person do not have any taxable income

 

This section is not applicable for the receipts by

a. Government

b. Banks

c. Other Notified Persons

 

This section is not applicable for the repayment of loans or deposits or advance for property accepted from 

a. Government

b. Banks

c. Corporation

d. Government Company

e. Other Notified Institutions

 

 

One has to be extremely cautious while entering into the above transactions since non-compliance of the above provisions could invoke penalty proceedings for an equal amount that has been accepted / repaid in cash. It would be really an arduous task for an assessee and his tax consultants to get impunity from the non-compliance of the above provisions.

 

Author – CA Arun Jose FCA

               

 

 

 

 

 

 

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