Penalty on receipt of an amount of Rs. 2 lakh or more in cash
Section 269ST of Income Tax Act (as inserted by the Finance Act, 2017 with effect from 1/4/2017) provides that no person shall receive an amount of 2,00,000 Rupees or more, —
1.in aggregate amount from a person in a day; [As amended by Finance Act- 2020]
Example: – a. If one sells goods worth 3,60,000 Rupees through three different bills of 1,20,000 Rupees each to one person and accepts cash in 1 single day at different times then section 269ST(a) of Income tax act will get violated.
2.in respect of a single transaction; or
Example: – If one sells goods worth Rs 600,000 through a single bill to another person and receives cash of 3,0,0000 on day 1 and another 3,0,000 on day 2 then section 269ST(b) will get violated.
3. in respect of transactions relating to one event ( event or occasion) from a person
Example- A accepts an order of catering, decoration and tent for the marriage event of B. He accepts cash of Rs.1,50,000 for catering Rs 1,00,000 for decoration and Rs.1,20,000 for tent work then section 269ST(c) of Income tax will get violated even if cash is accepted on different dates. All the cash transactions relate to the same occasion- marriage of B.
otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, or through such other electronic mode as may be prescribed.
However, the said restriction shall not apply to
- any banking company,
- post office savings bank,
- co-operative bank
- or a person notified by the Central Government.
Section 271DA of Income Tax Act provides for levy of penalty on a person who receives a sum in contravention of the provisions of section 269ST of Income Tax Act. The penalty shall be equal to the amount of such receipt amount.
However, the Income tax penalty shall not be levied if the person proves that there were good and sufficient reasons for such contravention.