Section 269ST

[Ethirajan Parthasarathy]

Penalty u/s 269ST is attracted for cash transaction above Rs.2,00,000/- My query is whether section 269ST is attracted if a partner draws cash of Rs.50,000/- per month towards his current account.

[Padmanathan KV]

Section 269ST reads as follows:

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,

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a 2[bank account or through such other electronic mode as may be prescribed]:

Therefore if partner withdraws Rs.50,000/- per month, it is neither a single transaction nor related to one event or occasion exceeding Rs.2,00,000/-.

Thus, in my opinion 269ST will not be attracted.

AI Summary

Cash receipt limit: periodic small withdrawals typically fall outside prohibition on large single or aggregate cash receipts. Section 269ST prohibits receipt of cash above a prescribed threshold except by account payee cheque, bank draft, electronic clearing through a bank account, or other prescribed electronic modes, applying where the amount is received in aggregate from a person in a day, in a single transaction, or in transactions relating to one event or occasion. Periodic modest monthly withdrawals by a partner, taken individually and not aggregated as a single transaction or tied to a single event, do not fall within those prohibited configurations.