Receipts related to a dealership/distributorship contract by the co-operative society on any day in a previous year not hit by section 269ST

CA. Manoj Gupta

The Finance Act, 2017 has inserted a new section 269ST from 1-4-2017 so as to provide that no person shall receive an amount of two lakh rupees or more --

(a) in aggregate from a person in a day; or

(b) in respect of a single transaction; or

(c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account [or through other prescribed electronic modes^[1] from 1-9-2019 as per Finance No. (2) Act, 2019].

CBDT vide Circular No. 25/2022, dtd. 30-12-2022 has clarified that in respect of Cooperative 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.