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Section 269 at a glance

The section is applicable from 1st April 2017

Applicable to

Not applicable to Transactions covered

Penalty

Disclosure requirements

Anyone receiving cash in excess of Rs. 2 Lakhs or more.

Cash receipts by a Banking company, Government, post office savings bank or co-operative bank, receipts from sale of agricultural produce by any individual or HUF; Transactions referred in Section 269SS

Receipt of Rs. 2 Lakhs or more:

1. in aggregate from a person in a day

2. in respect of a single transaction

3. in respect of transactions relating to one event or occasion from a person.

 

The penalties of Section 271DA will be levied; which specifies a penalty of an amount equal to the amount received in contravention of Section 269 ST

No disclosure requirements have been specified in either CARO or Auditor’s report.

 

Transactions covered by the section are explained with a simple example below:

  1. Receipts of Rs. 2 Lakhs or more from a person in a day in aggregate

E.g. Mr. X sold a car for Rs. 2.5 Lakhs and received the proceeds in cash on the same day

  1. Receipts of Rs. 2 Lakhs or more in respect of a single transaction

E.g. Mr. X got Rs. 1 Lakh on the same day and the balance on two different dates

  1. Receipts of Rs. 2 Lakhs or more from a person in relation to one event or occasion

E.g. Mr. X sold the car for Rs. 2.5 Lakhs to Y and received the cash in 10 installments.

Illustrative list of cases & situations that may be hit by the provisions of this section are as under:

  1. Sale of asset in cash for an amount of Rs. 2 Lakh or more.
  2. Hospital receiving cash of Rs. 2 Lakh or more from the patients
  3. Marriage Hall, Lawn, Hotel receiving Rs. 2 Lakh or more against any booking of an event.
  4. Event manager receiving Rs. 2 Lakh or more against any event
  5. Person dealing in luxury items like cars, Jewelry, Furniture, high value consumer appliances, holidays package sale to single person by single bill aggregating to Rs. 2 Lakh or more in a day.

 

Section 269ST is a very good step to promote cash less economy & restricts the cash transactions in excess of Rs. 2 Lakh from a person in a single day or in respect of any single transaction or in respect of transactions relating to one event or occasion from any person.

But, the way the section has been drafted; outcome would be very stringent, at least till the time government provides certain genuine exclusions by notification.

Till such additional exemption is provided by the CBDT notification, the following transactions would be considered as violation of Section 269ST

  • Introduction of Rs. 2 Lakh or more (in cash) as capital by the partners in the  partnership firm
  • Withdrawals of Rs. 2 Lakh or more(in cash) by the partners from the firm
  • Inheritance in cash of Rs. 2 Lakh or more by the legal heir.
  • Acceptance of cash even if there exists the relationship of principal & Agent between two persons.

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