Compulsory cash payment circular

Hi Preeja! It looks like you're asking about the "Compulsory Cash Payment Circular"—I assume you mean the rules or circulars issued regarding mandatory payments in cash under certain conditions.

Here’s a brief overview:

1. Compulsory Cash Payment Restrictions under Income Tax Act (Section 269ST):

• Rule: No person shall receive an amount of ₹2 lakh or more in cash (either in a single transaction or in multiple related transactions) from a person in a day for a single transaction or for transactions relating to one event or occasion.

• This applies to payments for purchase of goods or services.

• Payments exceeding ₹2 lakh have to be made through non-cash modes like cheque, demand draft, electronic transfer, etc.

• Violation attracts penalty equal to the amount received in cash.

2. RBI & GST Circulars on Cash Payments:

• RBI has various limits and guidelines to curb cash transactions and promote digital payments.

• GST laws do not permit input tax credit for payments made in cash exceeding ₹10,000 per day to a single supplier for goods or services.

Key Circulars / Notifications:

• Income Tax Section 269ST (introduced via Finance Act 2017).

• Various circulars by CBDT clarifying cash transaction limits.

• RBI notifications restricting large cash withdrawals or cash payments in certain sectors.

• GST circulars disallowing ITC on cash payments over ₹10,000.