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Tax implication on cash transaction in selling property

28 May 2017

Hello,

I've got a buyer of my property, who is a senior citizen . The buyer wants to pay 50% of the property selling amount in cash . The reason is , she has got cash payment during selling her own property.

Now . I'm being a salaried person, if I accept 50% of the sale value (i.e. around 20 Lacs) in cash, then

(i) how do I need to show the cash transaction as "income" in income tax ?

(ii) Can I deposite the entire cash amount in my bank a/c and then file for long term capital gain ?

(iii) How much tax do I need to pay ?

(iv) Is there any tax implication on the buyer side ?

Thanks,

sanjib

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11 Replies

thiruvayu (FCA) (155 Points)
Replied 28 May 2017

from 1-4-2017 you cannot accept cash for sale of property more than 2 lacs

100% is the penalty for violation

1 Like

(Guest)

100% PENALITY

CA Revanth Bharathwaj M (Freelance consultant in Direct Tax and Financial Reporting) (373 Points)
Replied 29 May 2017

how do we know your gains without your cost and year of acquisition? besides even by this information you have leaked, the IT can initiate a search operation in your premise. be careful when inquiring sensitive issues.

Praveen Kachhawa (Financial Accountant) (225 Points)
Replied 29 May 2017

Any person receiving cash of more than Rs 1,99,999 will have to pay 100% penalty of cash received i.e. if the amount received exceeds Rs 1,99,999, a recipient will have to pay the entire amount received as penalty under section 271DA of the Income Tax Act. Mode of receive amount prescribed by the law (a) an account payee bank cheque or (b) an account payee bank draft or (c) use of electronic clearing system through a bank account (e.g., NEFT, RTGS, online transfer from one bank account to another etc.). For tax calculation need some more information from you .

1 Like

KACHAM SHEKHAR (PROPRIETOR) (49 Points)
Replied 29 May 2017

Dear Friends

Section 269SS is applicable in this case and you can not accept Rs. 20,000 and above in cash. Otherwise you have to pay equivalent penalty for accepting cash.

(Guest)

sec 269ss applicable for deposit or loan not allowed to take more than 20000/- in cash

(Guest)

sec 269ss applicable for deposit or loan not allowed to take more than 20000/- in cash

thiruvayu (FCA) (155 Points)
Replied 29 May 2017

There is a difference opinion. Whether 269ST applies or 269SS for sale consideration.Please find herewith my presentation on cash restrictions imposed by income tax act.

Attached File : 243742 20170529130850 limits on cash payments under the income tax act as on 01 04 2017.jpg downloaded: 111 times

PRABIR PAUL (*****Accountant***** Never insult to any person for any kind of lack of knowledge or misread.) (1443 Points)
Replied 29 May 2017

As per section 269st 100% penalty on cash transaction will be impose on you if you received cash more than 1,99,999/-

KACHAM SHEKHAR (PROPRIETOR) (49 Points)
Replied 29 May 2017

Friend, there is no difference of opinion on applicability of section 269SS in the case of property sale transactions over Rs. 20,000.00. For sure it is applicable to all property transactions, except agriculture lands. You have to, invariably, accept the consideration otherwise than by cash if the sale consideration exceeds Rs. 20,000.00.

thiruvayu (FCA) (155 Points)
Replied 29 May 2017

extracts from 269SS "“specified sum” means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place". The word sale consideration is not used. The words used are advance or otherwise. The word otherwise takes color from the previous word that is advance. So otherwise means any amount received before sale such as advance money, margin money, deposit etc etc is covered. If government wants to include sale consideration also, it should have used the sale consideration itself. In my opinion it does not apply to sale consideration. Because sale consideration mentioned in sale cannot be changed. The main purpose of this section is to plug accommodation entries in the books. When restriction is put on loans and deposits, people started writing cash advance against immovable properties whenever there is a deficit in cash balance. To plug this loopewhole, government brought this amendment. Though this is implemented from 1-6-2015, till now no notice is issued by income tax department for cash received as sale consideration though they are having the requisite information in the form of AIR/Form 61A.