The Central Board of Direct Taxes (CBDT) has received representations from the stakeholders regarding applicability of provisions of Income-tax Act, 1961 (‘the  Act’) to cash sale of agricultural produce by the cultivators/agriculturists. 

The issue has been examined and vide Circular No. 27/2017 dated 3^rd November, 2017, CBDT has  clarified that cash sale of the agricultural produce by its cultivator to the trader for an amount less than Rs 2 lakh will not:- 

1. a) Result in any disallowance of expenditure under section 40A (3) of the Act in the case of trader;
2. b) Attract prohibition under section 269ST of the Act in the case of the cultivator; and
3. c) Require the cultivator to quote his PAN/ or furnish Form No.60. 

The Circular is available on www.incometaxindia.gov.in. 

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DSM/SBS

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