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Section 269ST - Clarification on the repayment of Loan Instalments in Cash

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Maharshi Shah

Cash Transactions
Repayment of Loan
Section 269ST

What is Section 269ST?

Section 269ST is considered as one of the important sections which were introduced by the Government with the intention of restricting Cash Transactions to curb Black Money and Tax Theft in the industry. Though this section simple in the front end but has various different angles which people faced in their practical life at the time of implementing this section.

Applicability of Section 269ST

The section 269ST states that, no person shall receive an amount of INR 2L or more:

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account.

Exclusions in Section 269ST

This section will not apply to-

Transactions referred to in section 269SS (attracted when we accept a loan from any person) will be excluded from the scope of the new section 269ST.

Penalty

FAQs

What is difference between 269SS and 269ST?

Except for the transactions referred to in Section 269SS and other receipts as exempted by Central Government by notification, Section 269ST of the Act shall apply to every receipt whether taxable or tax free, whether capital or revenue.

What is the limit for cash receipt?

Income Tax Act restricts any person to receive an amount of INR 2L 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, under Section 269ST.

Are cash payments illegal?

Paying wages in cash is legal and maybe more convenient. Some businesses deliberately use cash transactions to avoid meeting their tax and employee responsibilities. If you receive cash for work you do, you need to: be paid (at least) the correct award wages.

Got Questions? Ask Away!

  1. @Rachit_Awasthi1 The law does not have any restrictions for payment of cash for the transaction of purchase/sale of jewellery or immovable property etc. but if the value of a single transaction exceeds INR 2L, then the seller is prohibited from accepting any cash beyond INR 2L for such transactions.