Black money is one of the major problems the Indian economy is currently facing. However, the Indian government has been making ongoing systematic initiatives to reduce the black money problem. One such initiative is the introduction of Section 269ST of the Income Tax Act to combat black money.
In 2017, the Ministry of Finance of India introduced a provision to restrict large cash transactions. This was done to control money laundering, illegal transactions, and black money allocations and distribution, as well as to encourage people to go for digital modes of payment. These provisions were mentioned under Section 269ST of the Income Tax Act. This section has information like the permissible transaction limit in a day, which is INR 2 lakhs, what’s legal and illegal, etc.
Other details of this section 269ST, the difference between 269ST and 269SS, and the conditions for applicability of this section are given below.
When Did 269ST Introduced?
Section 269ST of the Income Tax Act was introduced in the 2017 budget. It came into effect on April 1st,2017. This act came after the demonetization act by the government of India, which happened on November 8, 2016. It was introduced as a measure to check the cash-based transactions largely done by black money hoarders to deposit it in the banks in the name of other people.
So, any person going to a bank for a cash deposit of multiple transactions and multiple accounts can be monitored. The limit for per-day transactions was set at INR 2 lakhs to control and supervise the transactions done in a day.
What is Section 269ST of Income Tax Act?
Section 269ST is for modes of undertaking cash transactions between any two or more parties. It states that;
Any individual can not receive an amount of more than INR 2 lakhs or more-
- From another person in a single day,
- In one transaction, and
- For one event or occasion from an individual.
Otherwise done by an account payee cheque, by bank draft, or by means of the electronic system through a bank account.
This section is not applicable:
- If the transaction receipt is given by any government or bank or post office saving bank or any cooperative bank;
- If the transaction is for the repayment of any loan amount as per section 269SS.
FAQs: 269st of Income Tax Act
1. How can I stop 269ST?
Section 269ST is not applicable under the following exceptions:
If the amount is for the repayment of any loan amount to any bank, NBFC, or HFC, and if the loan amount to be paid back is not more than INR 2 lakhs, it can be paid in cash in one transaction.
2. What is the difference between 269SS and 269ST?
Section 269ST allows a person to receive or give a sum of not more than INR 2 lakhs in a day through a single transaction from or to a single person.
Whereas, Section 269SS says that a person can not lend a sum of more than INR 20,000 in a day to any other person.
It’s legal to take a loan of more than INR 20,000 if there is an emergency, in the case of agricultural income, if a bank or registered finance entity is offering a loan, and if the person lending money has more than one source of income and is not causing tax evasion.
3. What is the Maximum Limit of Cash Payment?
According to section 269ST of the Income Tax Act, the maximum cash payment limit for a single individual per day is INR 2 lakhs.
4. What is the Specified Sum in 269ST?
The specified sum in Section 269ST is INR 2 lakhs. This limit is for cash transactions done in form of deposits, cheques, bank drafts, and electronic transfers from one person to another. The amount is for transactions between two entities, not multiples.
5. Can I Withdraw 20 Lakhs Cash From Bank?
Yes, you can withdraw INR 20 lakhs from your bank deposits in a day. But, you can’t exceed this limit in a day! However, you will be required to provide your PAN and might have to check the withdrawal limit of the bank you are withdrawing money from. Different banks have different withdrawal limits for a single day.
6. How much cash is allowed in the bank?
The cash deposit limit allowed in a bank is INR 20 Lakhs. But you will be required to show your PAN and Aadhaar for a large sum of money. Also, such big deposits done in a financial year can bring you under the Income-tax Acts’ surveillance.
Conclusion
Thus, Section 269ST of Income Tax Act becomes one of the most important sections introduced to restrict not just cash transactions, but money hoarding, money laundering, bribery, and other types of illegal activities involving large money transactions. The limit set for big transactions is INR 2 lakhs.
If in a day or on consecutive days such transactions are made by a single person or entity, it’s easier for the bank to trace and inform the IT Department. However, if the transactions are done as per the norms and do not involve any tax violation, there is no need to worry!