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Query Answer
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AS PER SECTION 269ST

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:

IF PARTY HAS ISSUED 10 BILL OF RS.40000 EACH ON DIFFERENT  DATE OF MONTH TO A SINGLE PARTY AND HAS RECEIVED CASH AGAINST ALL SUCH BILL ON DIFFERENT DATES WITH AMOUNT LESS THAN 50000/- EACH TIME WHETHER THIS SECTION HIT OR NOT

Reply

According to Section 269ST of the income tax act, no person shall receive an amount of rupees two lakh or more in cash mode. The intent of the section is clearly to put restriction on the cash transaction.

In respect of single transaction: It simply states that no single transaction should exceed Rs. 2 lacs or more. Thus if a person splits a invoice relating to a single transaction into different invoices of smaller values, then also the person receiving such amount cannot receive in cash.

For example: Suppose a caterer takes order for Convocation Function and received Rs. 10,00,000 in cash from his customer and gives item-wise bill for various services and each bill doesn’t exceed Rs. 2,00,000 and Rs. 10,00,000 cash is received on different dates and cash received on any one day is less than Rs. 2,00,000. This splitting of bills and splitting of payments day-wise will not help as all these payments are “in respect of transactions relating to one event or occasion from a person”.

In respect of transactions relating to one event or occasion from a person: It simply states that if a person receives cash in different transactions but all the transaction relate to one event or occasion, then also the recipient cannot receive cash. That is to say if all the transaction relating to one event adds up to Rs. 2 lakh or more, then the person receiving the same cannot receive.

For example: If Cash gift received on account of marriage exceeds Rs.2,00,000/- from “a person” than section gets attracted as marriage is single event here. It should be noted that gift received on account of marriage is exempt from tax u/s 56(2)(vii) does not alter the applicability of penalty u/s 271DA.

Therefore this section will hit even if amount receive in a single day is less than 2 lakh rupees in following case:

1) All amount received on different days connected with a single transaction

2)  All amounts received in different transaction but related to one event or occasion.

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