Carried out a cash transaction of Rs 2 lakh or more in 1 day? Income Tax dept will slap a penalty on you

Carried out a cash transaction of Rs 2 lakh or more in 1 day? Income Tax dept will slap a penalty on you

According to section 269ST of Income Tax Act, no person shall receive an amount of Rs 2 lakh or more from a person in a day.

The government has introduced a cash transaction limit per day, which is also enacted in Finance Bill, 2017. That means, a person in a day, is allowed to carry out cash or related transactions that is below Rs 2 lakh. If this limit is violated, that individual will be subject to penalties specified by Income Tax Department. High cash transaction arises in case of buying high value products. For example, you decided to settle your debt in lump sum, or bought an expensive watch or car or home where part payment is made in cash. Even in case of buying gold, jewelry or diamonds, there can be a situation where the value is above Rs 2 lakh. Even in these cases, as per guidelines, every individual must carry out transactions that are below Rs 2 lakh.

According to section 269ST of Income Tax Act, no person shall receive an amount of Rs 2 lakh or more from a person in a day; or in a single transaction; or in respect of transaction relating to one event or occasion from a person.

Such norm is not applicable to electronic transactions, cheque and bank draft.

But if you have carried Rs 2 lakh or more transaction in one single day, then you are liable to pay penalties which is 100% of the entire amount of cash received.

Penalties on cash transaction is specified under section 271DA of Income Tax Act. The section says, if a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt. These penalties are imposed by Joint Commissioner.

Let’s understand with few examples, explained by ClearTax earlier.

Example 1 – If one sells goods worth Rs 4,50,000 through three different bills of Rs.150,000 each to one person and accepts cash in 1 single day at different times then section 269ST(a) will get violated.

Example 2 – If one sells goods worth Rs 500,000 through a single bill to another person and receives cash of 2,50,000 on day 1 and another 2,50,000 on day 2 then section 269ST(b) will get violated.

Example 3 – X accepts an order of catering, decoration and tent for the marriage event of Y. He accepts cash of Rs.1,00,000 for catering Rs 1,50,000 for decoration and Rs.1,50,000 for tent work then section 269ST(c) will get violated even if cash is accepted on different dates. All the cash transactions relate to the same occasion- marriage of Y.

Hence, in above three cases penalty is levied.

However, one does not need to pay penalty, if such person proves that there were good and sufficient reasons for the contravention.

Interestingly, if Rs 2 lakh cash received in a day is from government, any banking company, post office savings bank or co-operative bank, or persons and receipts which are notified by central government are not subject to any penalties.

Source: zeebiz

 

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