In Budget 2017 new restrictions on cash transactions has been imposed. New section 269ST has been added in this regard and is applicable from 1st April 2017.
A person should not receive cash of Rs. 2,00,000 or more
- in aggregate from a person in a day; or
- in respect of a single transaction; or
- in respect of transactions relating to one event or occasion from a person.
In respect of receipt in the nature of repayment of loan by NBFCs or Housing Finance Company, the receipt of one instalment of loan repayment in respect of a loan shall constitute a ‘single transaction’ and all the instalments paid for a loan shall not be aggregated for the purposes of determining applicability of the provisions section 269ST. [Circular 22/2017]
Provided that the provisions of this section shall not apply to—
(i) any receipt by—
(b) any banking company, post office savings bank or co-operative bank;
(ii) transactions of the nature referred to in section 269SS;
(iii) such other persons or class of persons or receipts, which the Central
Government may, by notification in the Official Gazette, specify.
Payment through Bearer cheque and self-cheque will also be considered as payment made by cash.
Penalty on receipt of cash in contravention of above provisions
Section 271DA is introduced to levy penalty on cash receipts which contradicts the above provisions. The penalty is equal to the amount of such cash receipt. Any penalty to be levied as above shall be imposed by the joint commissioner.
Penalty is payable by the person receiving the money and not by the payer.
If such person proves that there were good and sufficient reasons for the contravention, then the penalty will not be imposed.
Section 269SS specifies the receipt of the following items:
Therefore, receipt of loan, deposit or specified sum will be out of purview of section 269ST.
Specified sum here means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not transfer takes place.
Applicability of Section 269ST in different situations
If one party sells goods to another of Rs 3,00,000 through different bills and cash is received in a day of Rs. 3,00,000 then section 269ST is violated and penalty under section 271DA of Rs. 3,00,000 is imposed.
If one party sells goods to another of Rs. 3 lakh through a single bill and cash is received of Rs. 2,20,000 on different days then section 269ST is violated and penalty under section 271DA of Rs. 2,20,000 is imposed.
If one party sells goods to another of Rs. 3.5 lakhs through two bills of Rs. 1.75 lakh each and cash is received on different days in respect of each bill then section 269ST is not violated.