I want to know how much cash payment can be made to interstate farmers for purchase of agriproduce?
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Quick Summary
This discussion clarifies the cash payment limits when purchasing agri-produce from interstate farmers. Generally, cash payments exceeding £2 lakh per farmer, per day, or per event are prohibited under Section 269ST. While there are exceptions for certain entities, farmers themselves are not exempt from this limit. It's important to note that Section 269ST applies to the recipient, not the payer, though the payer may face other restrictions on cash payments over £10,000.
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)
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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