Cash Sale Limit under GST / Income Tax Act

(a)

In aggregate from a person in a single day :

Mr . A sold an item amounting to Rs 2,50,000/- to Mr B and received 5 installments of Rs 50000/- in a single day . He has received more than Rs 2,00,000/- in a single day.

(b)

In respect of a single transaction :

In the example above , if Mr. A receives 5 installments in 5 days , still the transaction covers under sec 269ST of Income Tax Act as amount received against a single transaction.

(c)

In respect of transactions relating to one event or occasion from a person :

A caterer receives cash of more than Rs. 2 lakh in respect of a marriage even if separate bills are made and payment are received on separate days.

Note :

The Cash Transactions Limit is applicable on receiver and not the payer.

Non Applicability of section 269ST :

This section is not applicable on

(i) Any receipt by Government , banking company, post office savings bank or co-operative bank

(ii) transactions of nature referred to in section 269SS (Section 269SS deals with provisions related to receiving loan or deposit from specified person )

(iii) such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.

The CBDT vide press release dated 5th April 2017 clarified that the said cash transaction limit of Rs 2 lakh will not apply to withdrawal from banks, cooperative bank and post offices.

EXPENDITURE MADE IN CASH : As per section 40A(3)

of Income Tax Act 1961 , any expenditure in respect of which payment is made for sum exceeding

Rs.10,000/- in a single day to a single person otherwise

than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account, shall not be allowed as deduction.

Threshold Limit

– Cash payment exceeding Rs 10,000 to a person in a single day. The limit is extended to Rs. 35,000 in case the payments are being made for plying, hiring or leasing of goods carriage to a person in a single day.

Section 40A(3):

– Any expenditure in respect of which payment is made in sum exceeding rs.10,000/- in a single day to a single person otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account, shall not be allowed as deducation.