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Regarding cash purchase limit for purchase from interstate farmers.

subham jagota (18 Points)

04 June 2023

I want to know how much cash payment can be made to interstate farmers for purchase of agriproduce?

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4 Replies

Surinder (Assistant) (341 Points)
Replied 04 June 2023

Less then 2 Lacs

subham jagota (18 Points)
Replied 04 June 2023

Is 2 lakhs per day limit, or i can pay to multiple farmers following 2 lakhs per day limit payment to single farmer.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 04 June 2023

Its per farmer per day per event... Less then 2 lakhs can be given in cash.

Section 269ST prohibits any person to receive an amount of Rs.2 lakh and above in cash:

In aggregate from a person in a day, or
In a single transaction, or
In respect of transactions relating to one event or occasion from a person.

This section will not apply to-

Government
any banking company
post office savings bank
co-operative bank
other persons/receipts as may be notified
Transactions referred to in section 269SS (attracted when we accept loan from any person) will be excluded from the scope of the new section 269ST.

However there is a exception to section 271DA; According to section 271DA if person proves that there were good and sufficient reasons for contravention of section 269ST then no person shall be liable.

However, in case you are making payment of/above 2,00,000 to any farmer, Provisions of new Section 269ST will be applicable and Penalty can be levied on farmer for accepting payment above 2,00,000 in cash since no exemption is given to farmers under Section 269ST. (refer: Circular No. 27/2017 Dated 3rd November 2017)

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rama krishnan (12234 Points)
Replied 04 June 2023

269st applicable to recipient and not payer. as per section 40A(3) ,you are not supposed to make payments in excess of 10000 in cash. however, since the payments are made to farmers, there's no limit for you but the farmers are not supposed to receive cash in excess of 2 lakhs

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