Exemption to hospitals from applicability of Section 269ST due to Covid

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CBDT allows hospitals to receive Rs. 2 lakhs in cash for Covid treatment.

269ST not applicable to hospitals for covid treatment

CBDT vide notification no 56/2021 dated 07th May 2021 exempts hospitals from applicability of section 269ST for providing covid treatment. Here is the summary of the said notification for ease understanding:

1. What is Section 269ST of the Income Tax Act 1961?

Section 269ST is an important section of the act to curb black money transactions. As per the section

No person shall receive an amount of two lakh rupees or more—

(a) in aggregate from a person in a day; or
(b) in respect of a single transaction; or
(c) in respect of transactions relating to one event or occasion 

from a person, otherwise than by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed.

If a person receives any sum in contravention of the provisions of section 269ST, he shall be liable to pay, by way of penalty, a sum equal to the amount of such receipt.

2. What kind of exemption provided by the Government vide Notification 56/2021?

Vide said notification Central Government allowed hospitals to receive amount in cash for providing covid treatment and such transaction will not be treated as contravention of section 269ST.

3. Who all are exempt from applicability of Section 269ST as per the notification?

Government exempts hospitals, dispensaries, nursing homes, Covid Care Centres or similar other medical facilities providing Covid treatment.

4. Is there any time limit for applicability of said exemption?

Yes , as per the notification the exemption for cash payment receipt is for the period of 1st April 2021 to 31st May 2021 only.

5. What is the conditions to avail the said exemption?

As per the notification no 56/2021 , exemption from section 269ST is not a blanket exemption and it comes with certain conditions, i.e. hospitals should obtain the PAN or Aadhaar of the patient and the payee and the relationship between the patient and the payee by such hospitals, dispensaries, nursing homes, Covid Care Centres or similar other medical facilities.

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