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Applicability of sec 269st to business correspondents (bc) of banks

CA Parag Jani (BCom CA DISA Forensic Auditor) (288 Points)

30 March 2017

Section 269ST specifically exempts a banking company from its applicability of Rs.2 lac Cash Dealing Ceiling limit. My question is whether a Business Correspondent Entity (BC), which is working as an Extended Arm of Bank via its retailer network is also considered as Banking Company and thereby exempted from the provisions of Sec 269ST? Please guide on this.

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3 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 30 March 2017

Being AGENT TO PRINCIPAL, the same principle should apply; at least for any transaction carried on its behalf.

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CA Parag Jani (BCom CA DISA Forensic Auditor) (288 Points)
Replied 03 April 2017

Accodring to the Finance Bill 2017, the term banking company as mentioned in Section 269ST will have the same meaning as per explanation to Section 269SS, which does not include a Business Correspondent of a Bank as Banking Company.

So what should be done in this case?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177896 Points)
Replied 03 April 2017

The characteristics of transactions differ, so the same defination cannot be adopted in each case.

All in all, there are many such grey areas for the final implementation of the new section 269ST, like agriculturalists, marriage function receipts, bank withdrawals etc. etc. which are much different then the intention for which the section is applied for; and hence clarification from CBDT is much eagerly awaited.