While a video of Salem-based YouTuber V. Boopathi buying his dream bike by paying the majority of the total price of ₹2.6 lakh in coins has gone viral on social media, questions emerge about tax consequences, as it has been recorded that ₹2 lakh or more received in cash.
According to showroom representatives in Ammapet from where the bike was bought, an initial payment of ₹40,000 was made through bank transfer and only ₹2.20 lakh was received as coins.
Abhishek Murali, president, All India Tax Payers’ Association, pointed out that Section 269ST of Income Tax Act was introduced by the Finance Act, 2017 to restrict cash transactions.
As per the section, no person must receive an amount of ₹2 lakh or more from another individual within a day. Anyone found in contravention of the section shall be liable to pay 100% of the amount received in cash as a penalty, he said.
The showroom was also liable to collect TCS (tax collected at source). The rate would depend on whether the buyer provided his PAN details or not, another leading tax practitioner said.
The showroom representatives said that though the payment had been accepted, they had apparently sought Boopathi’s help to convert the coins to currency notes now for transaction convenience.
Experts pointed out that if the entire amount was deposited in a bank and then the payment was made through banking channels for the transaction, then it would comply with the provisions of the Income Tax Act.
(With inputs from Sanjay Vijayakumar in Chennai, Vignesh Vijayakumar in Salem and Vikas Dhoot in Delhi)
