Purchase of agricultural land

I am purchasing agricultural land. can I
make cash payment
Replies (5)
What is the amount being paid ?
150000 rupees to be paid
No issues. You can go ahead

But if you both buyer and seller have account then cheque payment or payment through Bank is advisable.

1. In the case of Prime Infra Developers (P) Ltd Vs ITO (ITAT Delhi), AO made a contention that cash payments made for the purchase of agriculture land from farmers will be disallowed u/s 40A(3).
2. However, the decision in the above case was given in favor of the assessee that such payments can be made in cash if the same falls under Rule 6DD exceptions. 
3. Only because of the reason that such payments fall under rule 6DD exceptions the same was not disallowed u/s 40A(3). Otherwise, cash payments made for the purchase of agriculture land would have been disallowed u/s 40A(3). 
4. Now, this disallowance is with respect to business, but the same will not be applicable to an individual. However, even though no section in Income tax talks about the purchase of agriculture land for cash (since it is an acquisition of IP) and since no income is involved in here but at the same time, there is a high risk of scrutiny from government officials. 
Please correct me if the above solution has an alternative view. 

Section 269ST in the Income Tax Act bans such transactions in cash amounting to Rs 2 lakh or more on a single day, in respect of a single transaction or transactions relating to one event or occasion from an individual

269ST won't apply.

150000/- is within the limits under 269ST.

Only caution is you have to establish the source of cash when at all required. Otherwise no issues.

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