List of services exempt from Rs. 2 lakh cash limit

The Finance Act, 2017 banned cash transactions of Rs. 2 lakh or more with effect from April 1, 2017. The Department of Revenue in the exercise of the powers conferred under Section 269ST(iii) of the Income Tax Act, 1961 has notified five entities that shall not be subject to the aforementioned provision.

This notification will have a retrospective effect and shall be deemed to have come into existence from April 1, 2017.

This section will not apply to the following services-

1. Receipt by a business correspondent on behalf of a banking company or cooperative bank, in accordance with the guidelines issued by the Reserve Bank of India. Earlier, the department had said that the Rs 2 lakh restriction will not apply to receipts by the government, banking company, post office savings bank or co-operative bank.

2. Receipt by a white label automated teller machine operator from retail outlet sources on behalf of a banking company or co-operative bank, in accordance with the authorisation issued by the Reserve Bank of India under the Payment and Settlement System 2007 (51 of 2007).

3. Receipt from an agent by an issuer of pre-paid payment instruments, in accordance with the authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 (51 of 2007).

4. Receipt by a company or institution issuing credit cards against bills raised in respect of one or more credit cards.

5. The receipt which is not includible in the total income under clause (17A) of section 10 of the Income Tax Act, 1961.

Contravention of Section 269ST would entail levy of 100 per cent penalty on a receiver of the amount.

The move to ban cash transaction above a threshold was aimed at curbing black money by discouraging cash transaction and promoting digital economy.