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Direct Tax Alert - CBDT permits acceptance of cash in excess of INR 0.2mn by certain healthcare facilities providing COVID-19 treatment

11 May 2021


The second wave of COVID-19 has gripped the entire nation and has overwhelmed the nation’s healthcare sector. The Central Government and State Governments are taking all possible measures to address the sudden surge by not only increasing the treatment facilities, support staff, medical equipment’s etc.  but also, taking certain fiscal and tax measures such as settling health care insurance claims within an hour, reducing the IGST rate on oxygen concentrators imported up to 30 June 2021.

On the direct tax front, the Central Board of Direct Taxes (CBDT) has recently issued a notification1 to provide relaxation from applicability of Section 269ST of the Income-tax Act, 1961 (IT Act) to healthcare facilities providing treatment to COVID-19 patients.

We, at BDO in India, have analysed and summarised the said circular hereunder:  

Provision of Section 269ST of the IT Act

Section 269ST of the IT Act prohibits any person (subject to certain exclusions2) to receive amount of INR 0.2mn and above in cash3 either

  • in aggregate from a person in a day, or
  • in a single transaction, or
  • in respect of transactions relating to one event or occasion from a person.

Who have been exempted?

The Central Government has permitted hospitals, dispensaries, nursing homes, Covid care centres or similar other medical facilities providing Covid treatment to patients to accept cash in excess of INR 0.2mn.

Is there any time frame during which this relaxation will be in force?

This relaxation is applicable for the amount received during the period 1 April 2021 to 31 May 2021.

Are there any conditions which needs to be satisfied?

Such facilities are required to:

  • Obtain the PAN or AADHAAR of the patient and the payer; and
  • Relationship between the patient and the payer.

BDO Comments

The relaxation will help the patients and their relative for making quick payment as well as the hospital and other facilities to quickly initiate the treatment. Further, the relaxation is expected to ease certain payment issues faced by taxpayers in cases where medical facilities do not accept account payee cheques, payment limit in debit/credit cards of taxpayers, insufficient bank balance etc. With corporates also extending help to their employees in these challenging times, a similar relaxation could have been extended to the application of section 40A(3) of the IT Act4.

1Notification No.56/2021, dated 7 May 2021

2(i)Government, banking company, post office savings bank or co-operative bank

(ii) transactions of nature referred to in Section 269SS of the IT Act

(iii) such other persons/class of persons as may be notified by Central Government. 

3Other than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account or prescribed electronic mode (i.e., Credit card, Debit card, Net banking, IMPS, UPI, RTGS, NEFT, BHIM)  

4Cash payment in excess of INR 10,000 attracts disallowance of the expenditure under section 40A(3) of the IT Act.