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Cash transaction

Nirav (Accountant) (595 Points)

06 April 2017

Hello,

One of my client wants to sell a house property. But buyer wants to give some portion of consideration in cash and some portion in cheque. And within a month my client will buy house property from a builder. But as there is amendment on cash transactions, can he recieve cash from his buyer and deposit that amount in bank and then issue cheque to builder for buying new house property?

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7 Replies

Shivraj Shintre (kolhapur) (175 Points)
Replied 06 April 2017

Kindly make note of the following changes in IT law that come into effect from 1-4-2017 -

(1) Limit for payment of expenses by cash (both, capital and revenue expenditure) reduced from Rs.20000 to Rs.10000 per day in aggregate per person. Capital expenses paid in cash beyond the said limit will not be taken into account for depreciation purposes. However, the cash payment limit for lorry fright etc. remains the same at Rs.35000.

(2) No person shall receive an amount of two lakh rupees or more, by cash (Sec. 269ST) —
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion.
The penalty for violation of above is to be a sum equal to the amount of such receipt.

Examples for above -

👉 i) If one sells goods worth Rs. 300000 through three different bills of Rs.100000 each to one person and accepts *cash in single day* at different times then section 269ST(a) will get violated.

👉 ii) If one sells goods worth Rs. 300000 through *single bill* to another person and receives cash of Rs.150000 on day 1 and another Rs.150000 on day 2 then section 269ST(b) will get violated, since it pertains to single transaction.

👉 iii) If one accepts cash of Rs.180000 for *sales* and Rs.20000 for *freight charges*, then section 269ST(c) will get violated even if cash is accepted on different dates, since they pertain to a single sales event.

👉 iv) If one sells his car for Rs.300000 and receives the amount in cash, then penalty levied on him will be Rs.300000.

(2A) In view of the newly introduced above said penal provisions relating to cash sales, the existing provisions (in vogue from 1.6.2016) relating to collection of TCS @ 1% on cash sales exceeding Rs.2 lakhs (Rs.5 lakhs, in the case of jewellery) are deleted. Consequently, there is no need to collect TCS on cash sales exceeding Rs.2 lakhs. Straight away it will attract equal amount penalty now.

(3) For below Rs.2 crores turnover cases -
👉 For Non Cash Sales (through Digital, Online, cheque, Bank etc.) : Net Profit will be taken as 6% of Turnover/Gross Receipt.
👉 For Cash Sales : Net Profit will be taken as 8% of Turnover/Gross Receipt.

(4) Tax Exemption limit is Rs.2,50,000/- (same as earlier) -
👉 After that, upto Rs.5 lakh, Tax Rate is 5% (earlier it was 10%). Tax rebate of maximum Rs.2500 will be allowed, for total income upto Rs.3.50 lakhs.
👉 Individuals having total income exceeding

Shivraj Shintre (kolhapur) (175 Points)
Replied 06 April 2017

sry wrongly posted

Shivraj Shintre (kolhapur) (175 Points)
Replied 06 April 2017

in your case your client cant accept 2 lakh or more in cash otherwise it is violation of sec 269st

Nirav (Accountant) (595 Points)
Replied 06 April 2017

Does selling of house property and receiving cash for that sale falls in section 269ST?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160327 Points)
Replied 07 April 2017

Section 269SS of the Income-tax Act is amended with effect from 01.06.2015 to provide that no person shall accept from any person any loan or deposit or any sum of money, whether as advance or otherwise, in relation to transfer of an immovable property otherwise than by an account payee cheque or account payee bank draft or by electronic clearing system through a bank account, if the amount of such loan or deposit or such specified sum is twenty thousand rupees or more.

So, it is advisable to accept all the amount by cheque/DD and verify that the same amount is declared in the sale deed.

TUSHAR KANTI BHATTACHARYA (Lawyer) (83 Points)
Replied 08 April 2017

But if a seller sell his good (like. mobile recharg voucher) worth of Rs 21000.00 and take cash on daily basis to the same distributors and it is not possible to take chaque or DD in stead of cash from those small retialors. Then how can the distributors will run his buisiness.

myrobostation BG (4 Points)
Replied 11 April 2017

1. Charges are levied by the bank for every cash transaction over and above a limit for free deposits and withdrawals per month.

2. These charges will only be applicable on cash transactions at branches and ATM withdrawals will not be considered in calculating the number of transactions.

3. The free transaction limit is different for different banks and is also based on the types of accounts. However, the restrictions are largely aimed at savings bank accounts.

4. The move is in line with the government’s efforts to move towards a cashlesssociety.

5. The new rule would negatively impact people who make withdrawals for daily or weekly use, or those who frequently transfer money from one city to another to their families.