After series of events, Black Money came under the radar of our Government and has started to enact provisions to control the same. When earlier attempts to curb black money did not work in a manner that was wanted, to improve conditions the government of India launched Section269ST to provide cashless transactions, to keep a track i.e. transparency and disclosure of different cash sources in case of tax evasion and black money, which will be reviewed in this guide.
The Finance Act, 2017 introduced section 269ST in the Income Tax, 1961w.e.f. 1st April 2017. Under sections 269SS and 269T the effectiveness to control the black money was not considerable, so the Government made provisions to restrict cash transactions. Section 269ST specifies that no person shall receive an amount of two lakh rupees or more:
A new section 271DA is introduced under Income Tax laws and rules. As per section 271DA of Income Tax Act, if a person receives any sum in contravention of any of the provisions and rules of section 269ST, he/she will be accountable to pay penalty of total sum equal to the amount of such receipt received in cash.
Thus, in simple terms the penalty amount would be 100% of the amount received in contravention of this section.
Example: In case Mr. Murtaza receives cash payment of Rs.6 Lakh then Mr. Daksh needs to pay Rs.6 Lakh as penalty under this section.
Note: There would be no penalty imposed if such person provides good and sufficient reasons for the contravention.
Government has introduced this new section to keep a check on black money and introduce tax transparency among transactions. Thus, the following steps are to be followed to certify one is compliant under this section:
Thus, there are three level of checks to be followed for each cash payment:
Now with increased attention over cash transactions and various activities of people/companies has skyrocketed their tax related problems. Hence it is necessary to manage and plan taxes so that you do not face the consequences of violation. To effectively file your taxes, enlist the tax experts at H&R Block India,