Making a giant money cost? Know the tax guidelines

Q. My daughter is getting married in November 2021, I have to pay the reserving quantity to the resort, and different events. Can I pay this complete quantity in Cash as I’ve some extra money mendacity with me or is there any restriction on money cost? Naresh Gupta (Mumbai)

Answered by Tarun Kumar, a Delhi Based chartered accountant

No individual is allowed to obtain a sum of Rs. 2,00,000 or extra, from an individual in a day or in respect of a single transaction or in relation to at least one occasion or event, in money or an impermissible mode. Section 269ST of the Income-tax Act imposes restrictions in respect of the receipts of Rs. 2 lakhs or extra in respect of transactions relating to at least one occasion or event from an individual. Marriage is an occasion, subsequently, when you make a cost in respect of such operate to the resort for an quantity exceeding Rs. 2 lakhs the provisions of part 269ST shall be utilized as all of the funds are made in respect of a single occasion.

There is not any such restriction on payer however this provision restricts an individual (recipient) from receiving an quantity of Rs. 2 lakh or extra in a money. If that resort receives Rs. 2 lakhs or extra in a money, the penalty may be invoked on them for a sum equal to the quantity of such receipt.

Although there is no such thing as a restriction on you to pay the money but when the income-tax division involves know the hefty money funds have been made by you, then they’ll situation you discover asking you to elucidate the sources of such money. If you incur any expenditure for which you haven’t any rationalization in regards to the supply of such expenditure or the reason provided by you shouldn’t be passable within the opinion of the assessing officer, the quantity of such expenditure could also be deemed as unexplained revenue of such monetary 12 months in your fingers. Such unexplained revenue shall be taxable at particular tax price of 78%. The assessing officer shall additionally levy penalty in respect of unexplained revenue underneath Section 271AAB and Section 271AAC.

Subscribe to Mint Newsletters * Enter a sound e mail * Thank you for subscribing to our e-newsletter.

Never miss a narrative! Stay related and knowledgeable with Mint.
Download
our App Now!!