Sections 269ST and 271DA

 About

For motivating the country to move to a cashless economy, the Government of India had come up with two sections 269ST AND 271DA.

  • 269ST – Mode of undertaking transaction
  • 271DA – Penalty for not complying the provisions of section 269ST

Analysis of section 269ST

Section 269ST strictly provides that no person* shall receive an amount of ₹ 2lacs or more (other than account payee cheque, bank transfer, electronic payment, draft) w.r.t:

  • Total of the amount by the same person in a day
  • Total of a single transaction in a day
  • Total of the transaction of the same event or occasion

Exemption of section 269ST

*Section 269ST does not apply to the following:

  • Any withdrawal from the bank, post offices saving bank
  • Any receipt by Government of India
  • Receipt by a credit card company against bill raised
  • Any other if notified by the Central Government in the Gazette of India.

Penalty for not complying the section 269ST

If any person violates the provision of section 269ST and acts against the provision of section 296ST, then the Joint Commissioner of Income-tax shall impose the penalty i.e. “100% of the amount received”.

Exemption to section 271DA

The penalty will not be imposed if “such person (who received the payment) that there was good and sufficient reason to receive that amount.

FAQ

Q1. For instance, Mr. Arvind had issued the invoice (Invoice No. 825 and a total of invoice is ₹ 465000.00) to Mr. Vikas on 02.03.2019.

Mr. Vikas had done the payment as below:

S.no.

Date

Payment

Remarks

1.

02.03.2019

₹ 200000.00

Cash

2.

05.03.2019

₹ 60000.00

Account payee cheque

3.

09.03.2019

₹ 125000.00

Bearer cheque

4.

09.03.2019

₹ 80000.00

Cash

 

Ans. Tax consequences for Mr. Arvind (the recipient)

269ST and 271DA will be attracted to Mr. Arvind because the aggregate payment exceeded ₹ 200000.00.

Penalty will be imposed by joint commissioner of Income tax = ₹ 405000.00 (₹ 200000 + ₹ 125000 + 80000).

Note: – Mr. Vikas had violated the provision of section 40A(3) of the income tax act, 1961.

Advice by Hoogmatic:

It is not beneficial for any party either recipient nor giver, so avoid cash transactions and help to move India to a cashless economy.