A new Section 269ST has been added to the Income Tax Act as a result of the measures taken by the Finance Act 2017 to curb black money. A cash transaction limit was restricted by Section 269ST and was only allowed to be worth up to Rs. 2 Lakh per day. No one will receive any sum of ₹2,00,000 or more, according to Section 269ST.
However, it has been made clear by the Central Board of Direct Taxes (CBDT) that cash withdrawal limit from banks and post offices are exempt. Consequently, the following situations are exempt from the requirements of section 269ST:
The deposited amount may be taken out of both the savings account and the bank account using a chequebook, a withdrawal slip, or an automated teller machine that accepts debit cards. The cash withdrawal limit from the bank varies between different banks and is also contingent upon the type of card being used.
It varies depending on the bank from ₹10,000 to ₹50,000 per day. The State Bank of India did, however, provide the transactional information listed below.
The principal sections of income tax that deal with the cash transaction limit are as follows:
The Income Tax Act’s Section 40A(3) addresses the maximum amount of cash that can be exchanged in a transaction. According to Section 40A(3), the Tax Act of India will disallow any expenditure over ₹10,000 that is paid for in cash. It is crucial that all taxpayers use banking methods like a debit, account transfer, check, or demand draft when making any payments for expenses that total more than ₹10,000.
If a taxpayer spends more than ₹10,000 to purchase an asset in cash, section 43 of the Income Tax Act states that the expenditure is disregarded when calculating the asset’s actual cost. It is crucial that all taxpayers who purchase assets send the seller all payments through banking channels.
A taxpayer is not permitted to accept or take loans, deposits, or payments in cash totaling more than ₹20,000 under Section 269SS. More than ₹20,000 in loans or deposits must always be obtained through a banking channel.
To the contrary, when accepting a loan or deposit from one of the following individuals or organisations, Section 269SS of something like the Income Tax Act is indeed not applicable:
Last but not least, the clauses of Section 269SS would not apply if both the person making the credit or deposit and the person accepting it have agricultural income nor had any other income subject to taxation under the Income Tax Act.
A penalty equivalent to the value of the loan, deposit, or specified total amount accepted could be imposed if section 269SS requirements are not followed.
No person is permitted to receive in cash an amount equal to ₹2 Lakh or more, according to Section 269ST of said Tax Act of India.
When receiving cash from any of the following sources totalling more than ₹2 lakh, Section 269ST’s provisions are not applicable:
In accordance with section 271DA, a fine equal to the value of the receipt is due if the requirements of section 269ST are not followed.
According to Section 269T, a branch of a bank, a cooperative society, a business, or another individual is prohibited from repaying a loan or deposit in any other way than with a check or bank draft made out in the borrower’s name. This prohibition applies in the following situations:
According to section 271E, a penalty equal to the loan or deposit amount repaid is due in cases where the requirements of section 269T are not met.
The cash withdrawal limit in a bank depends on various factors, including the type of account you hold and your banking history. In India, the cash transaction limit under income tax regulations typically ranges between Rs. 300 and Rs. 1,000 per day for ATM withdrawals, while the teller withdrawal limit can be higher, varying by the bank. For instance, Bank of India has a teller withdrawal limit of Rs. 50,000 per day.
If you require a withdrawal exceeding the daily cash withdrawal limit in a bank, you can usually do so by visiting a bank branch and consulting with a teller. However, the bank may necessitate identification and inquire about the reason for the substantial cash withdrawal.
It’s worth noting that the Reserve Bank of India (RBI) mandates that banks report all cash withdrawals of Rs. 10 lakhs and above to combat money laundering and other illicit activities.
Several factors can influence the maximum amount of cash you can withdraw from a bank:
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