Section 269ST of ITA, 1961 : Section 269St: Mode Of Undertaking Transactions

Explanation using Example

Imagine you're a car dealer selling a car for INR 2.5 lakh. A customer agrees to buy the car and proposes to pay the entire amount in cash in one go. According to Section 269ST of the Income-tax Act, 1961, you, as the car dealer, cannot accept this payment in cash because it exceeds the threshold of INR 2 lakh. Instead, the customer must pay either by an account payee cheque, an account payee bank draft, or through an electronic clearing system. If you accept the cash payment, you could face penalties under the Income-tax Act.