What is Section 269ST?
Section 269ST of the Income Tax Act restricts individuals and entities from receiving cash of Rs.2 lakh or more in a single day from a single source. This section was introduced in the year 2017. The liability of restricting such transactions falls on the receiver and not the payer. As per Section 269ST, no person should receive -
- Any sum of Rs.2 lakhs or more from an individual or entity in a single day.
- Rs.2 lakh or more as a single transaction.
- Rs.2 lakh or more for an occasion or one event from a single person or entity.
However, the Central Board of Direct Taxes (CBDT) has clarified that this cash withdrawal limit does not apply to withdrawals from Banks and Post offices. This section concerns only those people who are receivers. It means receivers of the cash will be the ones getting affected, not the person who gives it.
a) In aggregate from a person in a day
This simply states that a person cannot receive 2 lakh in cash, even if the transaction is in 2 different bills from the same person. Suppose you are a jeweler, now if someone buys jewelery worth Rs.3 lakh in cash from you. Then the penalty will be on you as you are the receiver. Even if you try to split the bill, the entity will remain the same.
On the other hand, it is okay if the amount is received from two different people and the amount received from both is less than the specified limit. Suppose from one person you receive Rs. 1.75 lakh for jewelry and from another person you receive cash of Rs. 50,000 for a different item, then it will not be considered violation of the section.
Now let's move to part (b)
b) In respect of a single transaction
Cash receipts of Rs.2 lakh or more from a single transaction are not allowed under section 269ST. If Sachin sells goods worth Rs.3 lakhs to Sehwag through a single bill and receives the amount in cash. If he receives Rs.1.5 lakhs on day 1 and Rs.1.5 lakh on day 2, then section 269ST will not be violated. Similarly, if he receives Rs.1.5 lakh twice from the same source on the same day, it will be considered a violation of section 269ST.
c) In respect of transactions relating to one event or occasion from a person
Cash transactions or receipts related to a single event or occasion cannot exceed ₹2 lakh.
For example, Dhoni receives an order for catering, decoration, and tent services for Virat's wedding. He accepts ₹1,00,000 in cash for catering, ₹1,50,000 for decoration, and ₹1,50,000 for tent services. Even if he receives the payments on different dates, the total cash transactions exceed ₹2 lakh for the same occasion—Virat's wedding—violating Section 269ST.
Withdrawal of cash from Banks
After the introduction of Section 269ST, there was panic among people that what if they want to withdraw cash from bank? Money deposited in both savings and current accounts can be withdrawn using a chequebook, withdrawal slip, or an ATM through a debit card. The cash withdrawal limit varies between banks and depends on the type of card used, typically ranging from ₹10,000 to ₹50,000 per day. Below are the transaction details as notified by the State Bank of India:
- Chequebook Withdrawals: Most banks restrict withdrawals using chequebooks to 60 transactions per half-year.
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Account-Specific Withdrawal Limits:
- For current accounts, a maximum of ₹1,00,000 can be withdrawn per week.
- For savings accounts, the withdrawal limit is capped at ₹24,000 per week.
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ATM Withdrawals:
- The daily withdrawal limit is ₹10,000.
- Salary account holders enjoy unlimited free ATM transactions.
- Other account holders are allowed three free transactions per month from non-SBI ATMs, after which a fee of ₹20 plus GST is charged per transaction.
Withdrawals from Post Office Accounts
The Department of India Post facilitates withdrawals from Post Office savings accounts through both Post Office counters and ATMs. Below are the key details regarding withdrawal limits and charges:
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Withdrawal Limits:
- A maximum of ₹25,000 can be withdrawn per day.
- Each transaction is capped at ₹10,000.
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Free Transactions:
- Post Office account holders are allowed up to five free transactions per month. These include both financial transactions (cash withdrawals) and non-financial transactions (such as balance inquiries or statement requests).
- Beyond the free transactions, a fee of ₹20 plus GST is charged per transaction.
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Withdrawals from Other Bank ATMs:
- Account holders are permitted up to three free transactions per month in metro cities and five free transactions in non-metro cities.
- For transactions exceeding these limits, a fee of ₹20 plus GST is applicable.
