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of <h1>Income Tax Rules on Cash Sales: Cultivators' Sales Under Rs. 2 Lakh Exempt from Disallowance, Prohibition, and PAN/Form 60.</h1> The circular clarifies the applicability of income tax provisions to cash sales of agricultural produce by cultivators to traders. Section 40A(3) of the Income-tax Act disallows expenditures exceeding Rs. 10,000 made otherwise than by account payee cheque/draft or electronic clearing, but exceptions in rule 6DD apply to purchases from cultivators. Section 269ST prohibits cash receipts of Rs. 2 lakh or more, except through specified banking methods. Transactions under Rs. 2 lakh do not require quoting PAN or furnishing Form 60. Therefore, cash sales under Rs. 2 lakh by cultivators to traders do not face disallowance, prohibition, or PAN/Form 60 requirements.
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