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Payment in Cash to NBFC

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wadhwanisam2@gmail.com

95 Points Posted on 29 April 2020

Dear Sir/Mam,

Can a person covered under audit make a payment to NBFC in Cash.
please resolve the query along with section for reference.

What is its implication in 3CD Form.

Replies (2)

Quick Summary

This discussion clarifies whether individuals can make cash payments to Non-Banking Financial Companies (NBFCs). Section 269ST of the Income Tax Act prohibits cash payments exceeding Rs 200,000 in a single transaction to an NBFC. Violating this can lead to a penalty equal to the amount received, as per Section 271DA, unless a reasonable cause is proven. Payments below the Rs 200,000 threshold are permissible without penalty.

Kiran Hathalia

460 Points Posted on 29 April 2020

As per section 269ST, any payment made by a person to NBFC in excess of Rs. 200,000 in a single transaction (here single transaction constitutes 1 single payment of EMI) in cash is prohibited in order to promote the digital economy. Further, on violation of the provisions, the penalty shall be imposed on the concerned person u/s 271DA of the Act of sum equal to the amount received from the NBFC And the penalty is imposed only by the Joint Commissioner of Income-tax. Provided that no penalty shall be imposed if such person proves that there was good and different reason for the contravention. So, if the payment is within the threshold of Rs. 200,000 then penal provisions would not be applicable.