04 October 2023
We sold goods to party in 2018 and now party wants to pay full amount in cash.Can we take full amount in cash on one single day.please clarify?
26 July 2024
Under the Indian Income Tax Act, Section 269ST places restrictions on accepting cash payments above a certain threshold. Here’s a detailed explanation of how Section 269ST affects you, and what alternatives you can consider:
### **1. Understanding Section 269ST**
**a. **Section 269ST** Overview**: - **Limit on Cash Transactions**: Section 269ST of the Income Tax Act prohibits any person from receiving an amount of ₹2 lakh or more in cash in a single day, from a single person, for any single transaction. - **Applicability**: This section applies to all entities, including individuals, businesses, and companies.
**b. **Penalties**: - **Penal Consequences**: If you accept cash exceeding ₹2 lakh in a single transaction, you could face a penalty equal to the amount received in contravention of the provisions of Section 269ST.
### **2. Impact on Your Transaction**
Since you are looking to accept ₹12,50,000 in cash for a sale made in 2018, and this amount is well above the ₹2 lakh limit set by Section 269ST, you would be violating this provision if you proceed to accept the cash in full.
### **3. Alternatives and Solutions**
To comply with Section 269ST and still accept the payment, you have a few options:
**a. **Split the Payment**: - **Multiple Transactions**: Although Section 269ST limits cash transactions to ₹2 lakh per transaction, you can accept multiple smaller payments, each not exceeding ₹2 lakh. However, this method requires careful handling to ensure compliance and proper documentation.
**b. **Bank Transactions**: - **Encourage Bank Payments**: Even if the party is bankrupt or facing financial issues, it is advisable to insist on bank payments. You can discuss with the buyer alternative methods such as cheques or electronic transfers. - **Documentation**: Ensure all transactions are well documented to avoid future disputes or compliance issues.
**c. **Alternative Methods**: - **Cheque or Demand Draft**: If the buyer cannot make the full payment through bank channels but can manage to pay using a cheque or a demand draft, this method will comply with the cash limit regulations. - **Installments**: You may negotiate with the buyer to make payments in smaller installments, each not exceeding ₹2 lakh, to avoid breaching Section 269ST.
### **4. Practical Implementation**
**a. **Record Keeping**: - **Maintain Records**: Keep detailed records of all transactions, including cash receipts and any agreements or communications related to payment arrangements. - **Documentation**: Document the reasons for accepting cash, if any exceptions or special circumstances apply, though it’s generally safer to comply strictly with the regulations.
**b. **Legal Compliance**: - **Consult a Tax Advisor**: Given the complexity of tax regulations and potential penalties, consult with a tax advisor or legal professional to ensure that you are fully compliant with the law and to explore any possible exemptions or allowances that might apply to your specific situation.
**c. **Communication**: - **Inform the Buyer**: Clearly communicate to the buyer the limitations on cash transactions and suggest alternative payment methods to avoid any legal complications.
### **Summary**
- **Section 269ST**: Prohibits accepting cash payments exceeding ₹2 lakh in a single transaction. - **Penalties**: Violation of this provision can lead to a penalty equal to the amount of cash received in contravention. - **Alternatives**: Consider splitting the payment, using bank channels, or accepting alternative payment methods. - **Consultation**: Seek advice from a tax professional to ensure compliance and explore all possible options.
For further details and tailored advice, especially if you have a complex situation or specific legal queries, consulting with a financial advisor or legal expert is recommended.
26 July 2024
a) split the payment.pl elaborate how can I receive in cash by splitting the payment and no penalty is attracted by the income tax.what should be the difference of dates in receiving cash of Rs200000/ each time?
CAclubindia
