Kollipara sundaraiah asked 5 years ago
Limit on cash sales under GST and IT Act
A registered trader selling limit on cash sales under GST and income tax act.
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CA Venu Gopal Gella
Mohit Bansal answered 5 years ago
Dear Member,
There is no limit prescribed for Cash Transactions under GST Law as of now, which means any registered person may enter into any business transaction attracting GST Law in cash of any amount including Sales/Purchases to/from unregistered persons.
However, Income Tax Law prescribes limits for Cash Transactions such as ₹10k Limit for cash business expenditure u/s 40A and ₹2L for any cash transaction u/s 269ST etc. Non-Compliance may attract dis-allowance of expenditure or even penalties.
Conclusion:
Since any GST taxable person is bound by provisions of both Income Tax Law as well as GST Law, he need to keep in mind the limit prescribed in Income Tax Law while doing business transactions.
As far as Sales Transactions are concerned the only applicable limit for seller is that he should not receive any cash amount of ₹2 Lakh or more for :
(a)any single sales transaction made to any person either in one or more days or
(b) multiple sales transaction in in single day to Same person aggregating to ₹2Lakh or more and receiving Cash thereof on same day.
(Limit of ₹10k is not relevant for seller, rather it will be relevant for purchaser to claim such purchase as business expenditure under Income Tax Law)
PS: Cash Expenditure limit of ₹10k is not applicable on assesses filing ITR on Presumptive Taxation Basis (u/s 44AD/44ADA etc) under Income Tax Act. However ₹2L limit u/s 269ST is applicable for all assesses subject to some exceptions.
I hope this will help.
