CBDT vide Circular No. 25/2022 dated 30.12.2022 has clarified that a dealership or distributorship contract by itself does not constitute an event or occasion for the purposes of clause (c) of Section 269ST. Cash receipts related to such a dealership or distributorship contract by the Co-operative Society on any day in a previous year, which is within the prescribed limit of Rs. 2 Lakh and complies with clause (a) as well as clause (b) of Section 269ST, shall not be aggregated across multiple days for purposes of clause (c) of section 269ST of the Income-tax Act, 1961 (‘Act’) for that previous year.
The clarification is issued in the light of references received in respect of Milk Producers’ Cooperative as to whether under the provisions of Section 269ST of the Act, receipt(s) in cash in a day of bank holiday/closure of bank day within the prescribed limit of Rs. 2 Lakh from a distributor against sale of milk when payments were through bank on all other days is to be considered as a single transaction or whether all such receipts in cash in a previous year would be aggregated in respect of transactions with a distributor to treat it as one event or occasion.
With this Circular, the Board has resolved the issue and clarified that a dealership or distributorship contract bu itself does not constitute an event or occasion for the purposes of clause (c) of Section 269ST.
Cash receipts within the prescribed limit of Rs. 2 Lakh related to such a dealership or distributorship contract by the Co-operative Society on any day in a previous year may not be aggregated across multiple days for purposes of clause (c) of Section 269ST for that previous year. Also, this relaxation shall be available to cooperative societies only if it complies with clause (a) and clause (b) of Section 269ST.
In other words, if receipts in cash from distributors or dealers by cooperative societies do not exceed Rs. 2 Lakh in a single day from the same person or from a single transaction, then such receipt in cash on multiple days in a previous year shall not be aggregated. Such a case will not fall under clause(c) of section 269ST as the contract of dealership or distributorship does not amount to one event or occasion.
Section 269ST of the Act prohibits the receipt of an amount of two lakh rupees or more 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.
The Board had stated that in the light of references received in respect of Milk Producers’ Cooperative as to whether under the provisions of Section 269ST of the Act, receipt(s) in cash on a day of bank holiday/closure of bank day within ‘the prescribed limit’ from a distributor against the sale of milk when payments were through bank on all other days is to be considered as a single transaction or whether all such receipts in cash in a previous year would be aggregated in respect of transactions with a distributor to treat it as one event or occasion.
Section 269ST of the Act prohibits the receipt of an amount of two lakh rupees or more 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.
The CBDT has notified the 'other electronic mode of payments' by a Notification No. 08/2020 dated 29.01.2020 and introduced Rule 6ABBA to provide for the following as an acceptable electronic mode of payments-
(a) Credit Card;
(b) Debit Card;
(c) Net Banking;
(d) IMPS (Immediate Payment Service);
(e) UPI (Unified Payment Interface);
(f) RTGS (Real Time Gross Settlement);
(g) NEFT (National Electronic Funds Transfer), and
(h) BHIM (Bharat Interface for Money) Aadhar Pay”
Read the full text of CBDT Circular 25/2022 dated 30.12.2022 on Clarification for the purposes of clause (c) of Section 269ST
Circular No. 25/2022
F. No. 225/129/2022/ITA-II
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)
•••••
New Delhi, Dated 30th December, 2022
Subject: Clarification for the purposes of clause (c) of Section 269ST of the Income-tax Act, 1961 in respect of dealership/distributorship contract in case of Co-operative Societies - reg.
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.
2. References have been received in respect of Milk Producers' Cooperative as to whether under the provisions of Section 269ST of the Act, receipt(s) in cash in a day of bank holiday/closure of bank day within 'the prescribed limit' from a distributor against sale of milk when payments were through bank on all other days is to be considered as a single transaction or whether all such receipts in cash in a previous year would be aggregated in respect of transactions with a distributor to treat it as onc event or occasion.
3. With respect to the reference at Para 2 above, it is clarified that in respect of Co-operative Societies, a dealership/distributorship contract by itself may not constitute an event or occasion for the purposes of clause (c) of Section 269ST. Receipt related to such a dealership/distributorship contract by the Co-operative Society on any day in a previous year, which is within 'the prescribed limit' and complies with clause (a) as well as clause (b) of Section 269ST, may not be aggregated across multiple days for purposes of clause (c) of Section 269ST for that previous year
(Ravinder Maini)
Director to the Government India
Download CBDT Circular 25/2022 dated 30.12.2022 on Clarification for the purposes of clause (c) of Section 269ST in PDF format
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