Income Tax: Sections 269ST, 269SS, and 269T

Key Sections Covered:

• 269ST – Restriction on Receipt of Cash exceeding ₹2 lakh
• 269SS – Prohibition on accepting loans in excess of ₹20,000 in cash
• 269T – Prohibition on repayment of loans in excess of ₹20,000 in cash

Section 269ST: Restriction on Receipt of Cash exceeding ₹2 lakh

Key Points:

• General Rule: No person shall receive ₹2 lakh or more:
  • In aggregate from a person in a day
  • In respect of a single transaction
  • In respect of transactions relating to one event or occasion from a person
• Accepted Payment Methods:
  • Account payee cheque
  • Account payee bank draft
  • Electronic clearing system (ECS) or any other prescribed electronic mode

Penalty for Non-Compliance:

• Penalty equals 100% of the amount received in violation

Illustrative Scenarios:

1. Receiving ₹2 lakh on a single date against five different invoices of ₹40,000 each – Violation
2. Receiving more than ₹2 lakh in cash in one transaction, even if in installments – Violation
3. Receiving more than ₹2 lakh in cash for a single event or occasion, even if in parts – Violation
4. Cash deposits into your account by customers that add up to ₹2 lakh or more – Violation
5. Cash gifts of ₹2 lakh or more received from a single person on the occasion of marriage – Violation

Not Applicable To:

• Government
• Any banking company, post office, or co-operative bank

Practical Considerations:

• Businesses must be cautious about giving bank account details for direct deposits to avoid accidental non-compliance.
• Transactions involving large sums should always be routed through acceptable electronic modes to avoid penalties.
• Gifts received during weddings are tax-free, but individual cash gifts of ₹2 lakh or more incur a penalty.

Section 269SS: Prohibition on Accepting Loans in Excess of ₹20,000 in Cash

Key Points:

• Prohibits accepting a loan or deposit of ₹20,000 or more in cash.
• Must be done through account payee cheque, draft, or ECS.
• Penalties for non-compliance are laid out but not covered in detail in this course.

Section 269T: Prohibition on Repayment of Loans in Excess of ₹20,000 in Cash

Key Points:

• Prohibits repaying a loan or deposit of ₹20,000 or more in cash.
• Must be done through account payee cheque, draft, or ECS.
• As with 269SS, penalties are applicable but details are beyond this course.

Conclusion:

• Businesses and individuals must ensure compliance with Sections 269ST, 269SS, and 269T to avoid hefty penalties.
• Awareness and adherence to acceptable modes of payment are crucial in maintaining compliance.

End of Lecture