Received Rs 2 lakh cash or more? Know income tax penalty
New Delhi: In order to curb tax evasion in the country, under Section 269ST, the Income Tax Act restricts any person from receiving an amount of Rs 2 lakh or more in cash, from a person in a day, in respect of a single transaction or in respect of transactions relating to one event or occasion from a person.
If someone decided to settle their debt with you in lump sum by paying you the borrowed money where the value is above Rs 2 lakh, as per guidelines, you are liable to pay penalties which is 100% of the entire amount of cash received.
Note that a transaction of an amount equal to Rs 2 lakh or more is allowed through an account payee cheque or an account payee bank draft or use of electronic clearing system (ECS) through a bank account. ECS through a bank account includes payment through credit card, debit card, net banking, IMPS (Immediate Payment Service), UPI (Unified Payment Interface), RTGS (Real Time Gross Settlement), NEFT (National Electronic Funds Transfer), and BHIM (Bharat Interface for Money) Aadhar Pay.
This means that payment of an amount of Rs 2 lakh or more is allowed via any of these mediums as stated above. A lot of people are not aware that accepting Rs 2 lakh or more cash in a day attracts a penalty.
What is the penalty for receipt of Rs 2 lakh via cash?
If a person receives any sum in contravention of the provisions of section 269ST, they are liable to pay a penalty of a sum equal to the amount of such receipt under Section 271DA. However if a person can prove that there were good and sufficient reasons for the contravention, there will be no penalty. This penalty shall be imposed by Joint Commissioner.
Transaction of Rs 2 lakh or above:
As per Section 269ST, any person who enters into a transaction of Rs 2 Lakh or above in cash, will be liable to a penalty of an amount equivalent to the amount of transaction. For example: If you buy a luxury product for cash worth Rs 7 Lakh, it is the shopkeeper who will have to pay the tax (penalty) of Rs 7 Lakh.
Exemptions to Section 269ST of the Income Tax Act:
Section 269ST of the Income Tax Act does not apply to any receipt of amount by the government, any banking company, post office savings bank or co-operative bank.