CBDT issued Clarification for purpose of Section 269ST of Income Tax

The Central Board of Direct Taxes(CBDT) has issued a clarification for the purposes of clause (c) of Section 269ST of Income Tax Act 1961 in respect of dealership/distributorship contract in case of Co-operative Societies via issuing Circular.

The Circular Stated, “Section 269ST inter-alia prohibits receipt of an amount of two lakh rupees or more (hereinafter referred to as ‘the prescribed limit’) by a person, in the circumstances specified therein, through modes other than by way of an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed.”

References have been received regarding the Milk Producers’ Cooperative regarding whether, in accordance with Section 269ST of the Act, cash receipts from a distributor against the sale of milk on a bank holiday or closed bank day within “the prescribed limit” are to be treated as a single transaction when payments were made through a bank on all other days, or whether all such receipts in a prior year would be combined in respect of transactions with the cooperative.

Regarding the reference at Paragraph 2 above, it is made clear that a dealership or distributorship contract by itself may not qualify as an event or occasion for the purposes of clause (c) of Section 269ST with regard to Co-operative Societies. For the purposes of clause (c) of Section 269 ST for the preceding year, a receipt related to such a dealership/distribution contract by the Co-operative Society on any day in the prior year, which is within “the prescribed limit” and complies with clauses (a) and (b) of Section 269ST, may not be aggregated across multiple days.

For Official Circular Download PDF Given Below: