31 January 2015
In case of a housing society if a member pay cash towards society maintenance, is there any threshold limit for accepting cash as per Income tax act or ant other relevant act?
14 July 2024
Yes, there are specific provisions under the Income Tax Act and other relevant regulations regarding the acceptance of cash payments by housing societies for maintenance charges or other purposes. Here are the key points to consider:
### Income Tax Act:
1. **Section 269ST**: - Under Section 269ST of the Income Tax Act, 1961, cash receipts exceeding Rs. 2 lakhs in aggregate from a single person in a single day are prohibited. This means that no person can receive an amount of Rs. 2 lakhs or more in cash: - In aggregate from a single person in a day, or - In respect of a single transaction or event, or - In respect of transactions relating to one event or occasion from a person.
- **Implication for Housing Societies**: If a member of a housing society pays maintenance charges in cash exceeding Rs. 2 lakhs in a single day, the society would be in violation of Section 269ST if it accepts and does not report this transaction appropriately.
### Other Regulations:
2. **Co-operative Societies Act**: - Co-operative societies are regulated under the respective state's Co-operative Societies Act. While these acts primarily govern the operations and management of co-operative societies, they may also have provisions or guidelines related to financial transactions, including cash acceptance limits.
3. **Other Regulatory Bodies**: - Depending on the state and local regulations, there may be guidelines or rules set by municipal corporations or housing development authorities regarding financial transactions and record-keeping by housing societies.
### Practical Steps for Housing Societies:
- **Payment Modes**: Encourage members to use non-cash modes of payment such as cheques, bank transfers (NEFT/RTGS), or digital payment platforms for paying maintenance charges.
- **Compliance**: Ensure that the society complies with the provisions of Section 269ST of the Income Tax Act if any cash payments are received. This includes: - Issuing receipts for cash payments. - Maintaining proper records of all transactions. - Reporting cash receipts exceeding Rs. 2 lakhs from a single member in aggregate for a day to the relevant authorities, if applicable.
- **Education and Awareness**: Educate members about the legal provisions and encourage compliance with non-cash payment methods to avoid complications or penalties.
### Conclusion:
It's important for housing societies to be aware of and adhere to the cash transaction limits specified under the Income Tax Act, particularly Section 269ST, when accepting payments from members for maintenance charges or any other purposes. Non-compliance can lead to penalties or legal consequences, so societies should implement proper procedures and encourage members to use digital or non-cash payment methods wherever possible.
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