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Income Tax Relief for Cash Payments over INR 2 Lakh of Covid Bills

With India battling the second wave of Covid-19, the Income Tax Department issued a notification on 7th May 2021, to allow hospitals, dispensaries, nursing homes, COVID care centres or other similar medical facilities to receive cash payments above INR 2 Lakh.

The exemption to this rule is applicable only from 1st April 2021 to 31st May 2021. You must provide the PAN (Permanent Account Number) or Aadhaar Number of the patient, or anyone making the payment on the patient’s behalf and their relationship with them.

Earlier, it was not allowed to receive cash payments above INR 2 lakh, and a penalty u/s 271DA was applicable.

In case you are receiving such cash payments above INR 2 lakh, the requirement to report the same u/s 269ST of the Income Tax Act when filing the Tax Audit report has been relaxed.

The restriction on the receipt of cash payments above INR 2 Lakh came into effect in 2017. The aim was to curb black money flows post demonetization in November 2016.
Anyone receiving cash payment over INR 2 lakh was liable to a penalty u/s 271DA, which was equivalent to the amount received.

We hope strength & safety for everyone during these testing times.

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