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Purchase of agri produce in cash - No PAN quoting required upto Rs 2 lakhs, says CBDT

By TIOL News Service

NEW DELHI, NOV 04, 2017: AGRICULTURAL income is not taxed in India but fiscal experts believe that it hugely contributes to the cash economy. Professionals offering accommodation entries or fake bills often lean towards agri sales for cash dealing. To dissuade use of cash the Income Tax Act has many provisions with some exceptions carved out within such provisions. One such provision is Section 40A(3) which disallows expenditure exceeding Rs 10K made in cash.

However, to help genuine transactions in the agri sector this Section allows cash payments for purchase of agri produce from cultivators. The rationale of such a provision is the non-realisation of 100% financial inclusion of farmers who may not have a bank account or they may not have the financial literacy to do banking.

Another provision in the I-T Act is the Section 269ST which prohibits receipt of Rs 2 lakh or more in cash from a person in a day or in respect of a single transaction. Thus whether it is a trader or a cultivator, the cash sale above Rs two lakh is not allowed. But confusion persists among a large section of the society about this provision and a good number of representations were received by the CBDT for a clarification.

The Board has now clarified that the quoting of PAN or furnishing of Form No 60 under Rule 114B is also not required upto Rs two lakh deal in cash. In other words, if the cash purchase or transaction is of less than Rs two lakh, it would not invite scisoors of Sec 40A(3) nor prohibition u/s 269S nor PAN quoting.


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