Prohibition or restriction on cash transactions under income tax
|Nature of cash transaction||Restriction/prohibition||Threshold limit||comments|
|40A(3)||Expenditure for business or profession||expenditure in respect of which a payment or aggregate of payments made to a person in a day||₹ 10000/-||Exception- refer rule 6DD|
|40A(3A)||Payment of last year liability incurred by the assessee for any expenditure||liability incurred by the assessee for any expenditure in the preceding PY and payment subsequently during any previous year,||₹ 10000/-||For transporter limit
|40A(3) 2nd proviso||Payment to transporter for goods transport||payment made for plying, hiring or leasing goods carriages,||₹35000/-|
|43(1) 2nd proviso||Payment for for acquisition of any asset or part thereof.||payment or aggregate of payments made to a person in a day,||₹ 10000/-||Excess amount above ₹ 10000/- shall be ignored for the purposes of determination of actual cost.|
|80D||Deduction for payment of health insurance premia||Any mode of payment other than cash||nil||Deduction For preventive checkup any mode of payment including cash|
|80G||donation||No deduction shall be allowed under this section in respect of donation of any sum exceeding ₹2000/- unless such sum is paid by any mode other than cash||₹2000/-||If payment in excess of ₹ 2000/- in cash, no deduction for excess amount. For example if donation in cash of ₹ 11,000/- deduction only of ₹ 2000/-|
|269SS||Mode of taking or accepting certain loans, deposits||No person shall take or accept from any other person any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed.
Note: penalty for contravention under section 271D equal to amount of loan or deposit taken or accepted.
Limit is aggregate amount at any time including existing balance whether due for refund or not?
| Prohibited at all except few cases such as:
loan or deposit or specified sum taken or accepted from
/Government company other institution, association or body or class of institutions, associations or bodies which the Central Government notify.
(2) both person taking loan, deposit and person from whom the loan or deposit or specified sum is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act.
|269T||no repayment of certain loans or deposits or specified advance in cash by any person||No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it or any specified advance received by it in other than specified banking mode.
Note: specified advance” means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place.
|Prohibited at all except few cases such as:
repayment of any loan or deposit or specified advance taken or accepted from Government/bank, post office savings bank or co-operative bank/corporation
/Government company/ other institution, association or body or class of institutions, associations or bodies which the Central Government notify for reasons to be recorded in writing.
Note: penalty for contravention under section 271E equal to repayment of any loan or deposit or specified advance taken or accepted
|269ST||Receipt of amount in cash||No person shall receive an amount of two lakh rupees or more—
(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion from a person,
| Prohibited at all except
Receipt by bank or post office savings bank or co-operative bank or such other persons or class of persons or receipts, which the Central Government may, by notification in the Official Gazette, specify.
FAQ: Whether exception cover donation?
A. no, so receiving donation is also prohibited.
Penalty for contravention under section 271DA equal to amount of receipts, provided no penalty if good and sufficient cause.
|194N||Cash withdrawal from bank, post office, co-operative society engaged in carrying on the business of banking||Withdrawal from bank, post office, co-operative society engaged in carrying on the business of banking exceeding ₹ 1 crore||₹ 1 crore||Limit: aggregate of amounts in a FY.
Withdrawal exceeding ₹ 1 crore shall attract TDS @2%.
Exception: shall apply to any payment made to—
(i) the Government;
(ii) any banking company or co-operative society engaged in carrying on the business of banking or a post office;
(iii) any business correspondent of a banking company or co-operative society engaged in carrying on the business of banking,