BLOG on Income Tax Management for - AY 2022-23 & 2023-24

Restriction on Cash Transactions [Section 269ST and 271DA] [W.e.f. 1.4.2017]

(A) Restriction on Receiving of Amount of Rs. 2,00,000 or more [Section 269ST]:

No person shall receive on or after 1.4.2017, an amount 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,

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account:

Clarification

It is clarified that in respect of receipt in the nature of repayment of loan by NBFCs or HFCs, the receipt of one instalment of loan repayment in respect of a loan shall constitute a ‘single transaction’ as specified in clause (b) of section 269ST of the Act (see above) and all the instalments paid for a loan shall not be aggregated for the purposes of determining applicability of the provisions section 269ST.

(B) Section 269ST Not to Apply in the following Cases [Proviso to section 269ST]:

The provisions of section 269ST shall not apply to—

any receipt by—
1. Government;
2. any banking company, post office savings bank or co-operative bank;
transactions of the nature referred to in section 269SS;
such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.

(1) Notification No. 28/2017, dated 5.4.2017

In exercise of the powers conferred by clause (iii) of the proviso to section 269ST of the Incometax Act, 1961, the Central Government hereby notifies that the provision of section 269ST shall not apply to receipt by any person from an entity referred to in sub-clause (b) of clause (i) of the proviso to section 269ST i.e receipt from any banking company, post office savings bank or co-operative bank.

(2) Notification No. 57/2017, dated 3.7.2017

In exercise of the powers conferred by clause (iii) of the proviso to section 269ST of the Incometax Act, 1961, the Central Government hereby specifies that the provision of section 269ST shall not apply to the following, namely:—

receipt by a business correspondent on behalf of a banking company or co-operative bank, in accordance with the guidelines issued by the Reserve Bank of India;
receipt by a white label automated teller machine operator from retail outlet sources on behalf of a banking company or co-operative bank, in accordance with the authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007;
receipt from an agent by an issuer of pre-paid payment instruments, in accordance with the authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007;
receipt by a company or institution issuing credit cards against bills raised in respect of one or more credit cards;
receipt which is not includible in the total income under clause (17A) of section 10 of the Income-tax Act, 1961.

The notification shall be deemed to have come into force with effect from the 1st day of April, 2017.

Explanation.—For the purposes of this section,—

“banking company” shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS;
“co-operative bank” shall have the same meaning as assigned to it in clause (ii) of the Explanation to section 269SS.

As per Explanation to section 269SS the meaning of "banking company" and "co-operative bank" is as under:

"banking company" means a company to which the provisions of the Banking Regulation Act, 1949 applies and includes any bank or banking institution referred to in section 51 of that Act;
"co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949.

(C) Penalty for Failure to comply with Provisions of Section 269ST [Section 271DA]

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:

Provided that no penalty shall be imposable if such person proves that there were good and sufficient reasons for the contravention.
Any penalty imposable under section 271DA(1) shall be imposed by the Joint Commissioner.