Check this Income Tax provisions before entering into Cash Transactions
Here are some of those transactions and the penalty you may attract for flouting the rules:
| Sr. no. | Transactions | Sections | Cap on cash transaction | Penalty for cash transaction |
| 1 | Disallowance for cash expenditure | 40A(3) | Payment of any expenditure above Rs. 10,000 | No deduction |
| Payments for plying, hiring or leasing of goods carriage above Rs 35,000 | ||||
| 2 | Determination of actual cost of asset | 43(1) | Payment above 10,000 for purchase of asset | Such payment won’t be included in actual cost of asset (viz, No depreciation) |
| 3 | Prohibition on receiving cash | 269ST | Rs. 2,00,000 or more | 100% of amount received |
| Examples of Transactions referred to in (3): | ||||
| (a) In aggregate from a person in a day | E.g. if a person receives Rs. 2.25 lakhs in cash for 2 different bills of Rs. 1 lakhs and 1.25 lakhs. | Then also Penalty is levied of 100% of amount received. | ||
| (b) In respect of single transaction | If there is single bill of Rs. 3.10 lakhs and cash is received on different days of Rs. 1.6 lakhs and 1.5 lakhs. | Then also Penalty is levied of 100% of amount received. | ||
| (c) In respect of transactions relating to one event or occasion from a person | E.g. If marriage is one occasion and a person receives amount of Rs. 3 lakhs. | Then penalty is levied of 100% of amount received. | ||
| To whom does Section 269ST applies? | To any person receiving cash above Rs. 2,00,000/-. | |||
| For which transactions is Section 269ST not applicable? | Restrictions on cash receipt of Rs. 2 lakhs or more w.e.f. 01.04.2017 shall not apply to- | |||
| a) Government, any Banking company, post savings bank or co-operative bank; | ||||
| b) Transactions of the nature referred to in Section 269SS; | ||||
| c) Such other persons or class of persons or receipts, as may be specified by the Central Government by notification in the Official Gazette. | ||||
| 4 | Withdrawal of cash from Bank account | As per Press Release issued by Finance Ministry, Department of Revenue dtd. 05.04.2017, Cash withdrawals from Government, any Banking company, post savings bank or co-operative bank is permissible. | No contravention of the Section, hence no penalty shall be levied. | |
| 5 | Prohibition on acceptance of cash loans, deposits, etc. | 269SS | Rs. 20,000 or more | 100% of amount received |
| 6 | Prohibition on repayment of loans or deposits in cash | 269T | Rs. 20,000 or more | 100% of amount paid |
| 7 | Health Insurance premium | 80D | No cash payment allowed | No deduction |
| 8 | Investment linked deduction for capital expenditure | 35AD | Payment above Rs 10,000 for any capital expenditure | No deduction |
| 9 | Donations to certain funds and charitable institutions | 80G | Donations above Rs. 2,000 | No deduction |
| 10 | Donations for scientific research or rural development. | 80GGA | Cash donation above Rs. 10,000 | No deduction |
| 11 | Donations by companies to political parties. | 80GGB | No cash payment allowed | No deduction |
| 12 | Donations by any person to political parties | 80GGC | No cash payment allowed | No deduction |
| 13 | Dealings in cash in immovable property transactions | 269ST & 269T | Acceptance or repayment of loan, deposit or advance from any person above Rs. 20,000/- in cash | Penalty is 100% of the amount accepted or repaid. |
| (amended w.e.f. 01.06.2015) | ||||
Credits : CA Shraddha Kothari
Disclaimer: This article is only for General Public Information and not a professional advice. Please consult your legal advisor before taking any decision. We are not finanacially liable for any loss incurred by any person.