Can a person purchase a land in cash in rs. 500000/-

santosh (Querist) 01 May 2020 This query is : Resolved
Can a person purchase a land in cash in Rs. 510000/- from 3 land owner having equal share (Rs. 170000/- each Share, i.e. below 2 Lakh) in one deed.

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While it might seem possible to purchase land for Rs. 5 lakhs by paying each of the three owners less than Rs. 2 lakhs individually, this is generally not permissible under the Income Tax Act. The Act prohibits receiving Rs. 2 lakhs or more in cash in a single day, for a single transaction, or related to one event. Furthermore, cash payments exceeding Rs. 10,000 for asset acquisition or expenditure are disallowed for tax purposes, and loans or deposits over Rs. 20,000 must be made through banking channels.

Raj Kumar Makkad (Expert) 01 May 2020
Why not? However, the source of the money shall have to be declared if asked by Income Tax department at any stage.

Hemant Agarwal (Expert) 02 May 2020
1. YES .... PROVIDED you are ready to be prosecuted for making aggregate cash payments of over 200000/- per day basis, which is prohibited, for an Individual tax payer, under the Income Tax Act.

Keep Smiling .... Hemant Agarwal
VISIT: www.chshelpforum.com

P. Venu (Expert) 02 May 2020
What is the problem in paying by cheque or by Bank transfer?

KISHAN DUTT KALASKAR (Expert) 02 May 2020
Dear Sir,
Source of income is the main criteria when that question arise. But avoid cash payments which may avoid many troubles in future.

Dr J C Vashista (Expert) 02 May 2020
Although the transaction can be made in cash yet it would be appropriate to make part payment in cash preferably majority of consideration may be done through bank by cheque/DD or any other mode of payment.

Rajendra K Goyal (Expert) 02 May 2020
Prohibited under Income tax Act.

Raj Kumar Makkad (Expert) 02 May 2020
Income Tax Act shall definitely come in the way.

Rajendra K Goyal (Expert) 03 May 2020
Section 269ST of the Income Tax Act provides that no person can receive an amount of INR 2 Lakhs or more in cash:
• In aggregate from a person in a day;
• In respect of a single transaction; or
• In respect of transactions relating to one event or occasion from a person.

Rajendra K Goyal (Expert) 03 May 2020
With Section 269ST following sections of IT Act need to be considered before doing any cash transaction:

Under Section 40A(3), if payment for any expenditure of over Rs.10,000 is made in cash, then the expenditure will be disallowed under the Income Tax Act. Hence, it is important for all taxpayers to make any payment for the expense over Rs.10,000 through banking channels like debit card, account transfer, cheque or demand draft.

Under section 43 of Income Tax Act, if payment of more than Rs.10,000 is made by a taxpayer for the acquisition of an asset by cash, the expenditure would be ignored for the purposes of determination of actual cost of the asset. Hence, it is important for all taxpayers acquiring assets to make all payments to the seller through banking channels.

Section 269SS prohibits a taxpayer from taking/accepting loans or deposits or a sum of more than Rs.20,000 in cash. All loans and deposits of more than Rs.20,000 must always be taken through a banking channel. Section 269SS of the Income Tax Act is however not applicable when accepting/taking loan or deposit from a person or entity mentioned below:
• Government;
• Any banking company, post office saving bank or co-operative bank;
• Any corporation established by a Central, State or Provincial Act
• Any Government company as defined in clause (45) of section 2 of the Companies Act, 2013
• An institution, association or body or class of institutions, associations or bodies notified by Central Government in the official gazette.

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Raj Kumar Makkad (Expert) 03 May 2020
A layman should be provided only the relevant legal position instead of pandora of legal provisions which in turn can only confuse him or he may also think to obtain law degree to understand the said provisions.

Rajendra K Goyal (Expert) 04 May 2020
In other words,
In a day more than Rs. 2,00,000/- in cash cannot be received.
Cash payment more than Rs. 10,000/- should be through account.
Loan more than 20,000/- should be through account except when taken from Bank Govt. etc.
In all above cases the actual provisions prevails / actual section should be referred for guidelines / applicability. Respective IT Act provisions mentioned above in previous posts.

Rajendra K Goyal (Expert) 04 May 2020
So, any transaction more than above is illegal / can attract penalty / punishment under IT Act. Hence cash purchase for Rs. 5,00,000/- is not permissible under IT Act / law.

Raj Kumar Makkad (Expert) 04 May 2020
How many threads are required to attend a simple query by a single expert especially when the same expert has already given his final opinion?

Rajendra K Goyal (Expert) 04 May 2020
Sometime reply in more than once has to be submitted, in case of need / requirement of the query. No fix yardstick can be fixed in case of necessity.

Rajendra K Goyal (Expert) 05 May 2020
The maximum no. of times supplementary reply / additional advice / analysis / information can be given has not been fixed by the site.

P. Venu (Expert) 05 May 2020
It is disappointing that an expert pleads himself to be stranger to self-discipline.

Rajendra K Goyal (Expert) 05 May 2020
Once again it is custom / practice of the site that supplementary reply can be given / there is no restriction for no. of posts from an adviser / expert in a single thread provided circumstances so warrant.

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