MODE OF UNDERTAKING TRANSACTIONS. 269ST. No person shall receive an amount of two lakh rupees or more—
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) 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 [or through such other electronic mode as may be prescribed]:
Provided that the provisions of this section shall not apply to—
(i) any receipt by— (a) Government;
(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.
Explanation.—For the purposes of this section,— (a) “banking company” shall have the same meaning as assigned to it in clause (i) of the Explanation to section 269SS;
(b)”co-operative bank” shall have the same meaning as assigned to it in clause (ii) of the explanation to section 269SS. The Central Board of Direct Taxes has prescribed other electronic modes to provide for the followings as an acceptable electronic mode of payments–
(a) Credit Card;
(b) Debit Card;
(c) Net Banking;
(d) IMPS (Immediate Payment Service);
(e) UPI (Unified Payment Interface);
(f) RTGS (Real Time Gross Settlement);
(g) NEFT (National Electronic Funds Transfer), and
(h) BHIM (Bharat Interface for Money)Aadhar Pay”͖
For this purpose, a new Rule 6ABBA with the heading ‘Other electronic modes’ is introduced the Income Tax Rules, 1962. This rule has been given a retrospective effect and will come into in force from 01- 09-2019 even though the notification was issued on 29-01-2020.
KEY POINTS IN SEC 269ST
1. Restriction is only on the person receiving money and not on the person paying money:
- The restriction u/s 269ST is only on receipt of money and not on payment of money.
- Therefore, penalty u/s 271DA on violation of these provisions shall be leviable only on the person receiving money and not on the person paying the money.
2. Restriction is applicable on all the entities:
- The restriction U/s. 269ST is applicable on all the entities (except those which have been exempted specifically as per the proviso).
- In the section the word “Person” has been used for both payer and the receiver.
- As per section 2(31), the word person is defined in inclusive manner to include individuals, HUFs, companies, firms, AOPs, BOIs, local authorities and other artificial juridical persons
3. Applicable to receipts whether for business purpose, personal purpose
- The restriction is applicable irrespective of purpose of accepting amount i.e., whether business purpose or personal purpose or as a trustee, custodian etc.
- However, these provisions are not applicable to the transactions of receiving money for loan, deposit or for transfer of immovable property because there are already separate provisions restricting receipt of money in cash etc. for these purposes. The limit for accepting money for those purposes in cash etc. is 20,000/- only.
4. Character of Receipt Irrelevant
- The character of receipt is irrelevant i.e. exempt income / taxable income etc
5. Applicable to receipts whether with or without consideration:
- The restriction is applicable irrespective of the fact that whether the receipt is with or without consideration. In case of receipt of money without consideration in contravention of Section 269ST, there will be dual impact, one charge of tax u/s. 56 (in specific cases) as well as levy of penalty u/s. 271DA.
- Gift in cash (Even though gift received from relative, according to provision of section 56(2)(vii) of the I.T.Act,1961, is exempted but if the amount of Gift of Rs 2 Lakhs or more is received from relative in cash w.e.f 01.04.2017 assessee has to bear penalty u/s 271DA for contravention of this section 269ST.
6. PAN not relevant
It is irrelevant whether the person receiving the cash has a PAN (Permanent Account Number) or not.
7. Search & Seizure
- It is not necessary that the restriction of Receipt of Rs 2 Lakhs or more is to be based on the entries in books of account alone.
- An entry or record found during search under section 132 or survey under section 133A may also show that the recipient has received more than the specified sum in non permissible mode.
Author: R.S. Kalra R.S. Kalra & Associates