Courts must flag cash deals worth ₹2 lakh or more to tax dept: SC

The Supreme Court on Wednesday ruled that courts must inform the relevant jurisdictional income tax authorities if a suit filed before them involves any claims of cash transactions of ₹2 lakh or more.

- BHAVINI MISHRA

In a series of directions relating to cash transactions above ₹2 lakh, the country's top court also said that whenever a sum of ₹2 lakh or more is "claimed to be paid in cash towards consideration for the conveyance of any immovable property in a document presented for registration", the sub-registrar must report this to the income tax department in that jurisdiction. The ruling was delivered by a Bench of Justice J B Pardiwala and Justice R Mahadevan.

In all such cases, once the income tax authorities have been informed of a cash transaction of ₹2 lakh or more, the department will have to conduct an inquiry to check whether such a transaction is legal and whether it violates Section 269ST of the Income Tax Act.

Section 269ST prohibits individuals and entities from receiving ₹2 lakh or more in cash from a single source, even if the amount is split into several payments.