Credit card bill payment exempt from cash dealing limit of Rs 2 lakh

Restrictions on cash dealings of Rs 2 lakh or more will not apply to credit card bill payments, business correspondents appointed by banks and issuers of prepaid instruments, the revenue department has said. The Finance Act 2017 banned cash transaction of Rs 2 lakh or above with effect April 1, 2017. However, some exceptions were made.

Through a notification, the Income Tax Department has exempted five entities from the purview of this Section. These include receipts by a business correspondent on behalf of a banking company or co-operative bank; and receipt by a company or institution issuing credit cards against bills raised in respect of one or more credit cards.

Receipt from an agent by an issuer of pre-paid payment instruments, receipt by a white label ATM operator from retail outlet and receipt which is not includible in the total income under clause (17A) of section 10 of the I-T Act, 1961, have been excluded from the purview of the Section 269ST.

"The notification shall be deemed to have come into force with effect from the April 1, 2017," the revenue department said. The notification is dated July 3. Nangia & Co Director Shailesh Kumar said this would provide much needed relief to the banking sector and also to the rural sector and remove hardship in these genuine cases.

"In order to provide relief to certain genuine cases, which are also regulated under various other government laws relating to banking and payments, the government has now issued a notification exempting certain cash transactions from this limit," Kumar said.

Earlier, the department had said that the Rs 2 lakh restriction will not apply on receipts by government, banking company, post office savings bank or co-operative bank.