Clarification has been given by CBDT on applicability of the Income tax provisions on cash sale of Agriculture produces to a TRADER.
It clarifies the provisions of sec 40A(3) together with sec 269ST and related rules which essentially make different limits while dealing in CASH e.g. Sec 40A(3) provides a dis-allowance of expenditure exceeding Rs. 10,000 made other than a/c payee cheque/ bank system however sec. 269ST prohibits receipt of Rs 2 laks or more.
Conclusion given by the circular :
""it is clarified that cash sale of the agricultural produce by its cultivator to the trader for an amount less than Rs 2 Lakh will not:-
a) result in any disallowance of expenditure under section 40A (3) of the Act in the case of trader.
b) attract prohibition under section 269ST of the Act in the case of the cultivator; and
c) require the cultivator to quote his PAN/ or furnish Form No.60 ""
For reading full text of the circular please refer link - http://www.incometaxindia.gov.in/Communications/Circular/Circular27_2017.pdf
It clarifies the provisions of sec 40A(3) together with sec 269ST and related rules which essentially make different limits while dealing in CASH e.g. Sec 40A(3) provides a dis-allowance of expenditure exceeding Rs. 10,000 made other than a/c payee cheque/ bank system however sec. 269ST prohibits receipt of Rs 2 laks or more.
Conclusion given by the circular :
""it is clarified that cash sale of the agricultural produce by its cultivator to the trader for an amount less than Rs 2 Lakh will not:-
a) result in any disallowance of expenditure under section 40A (3) of the Act in the case of trader.
b) attract prohibition under section 269ST of the Act in the case of the cultivator; and
c) require the cultivator to quote his PAN/ or furnish Form No.60 ""
For reading full text of the circular please refer link - http://www.incometaxindia.gov.in/Communications/Circular/Circular27_2017.pdf
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