THE Income Tax (IT ) Department’s Intelligence and Criminal Investigation Wing (ICIW ) found more than Rs 40 lakh worth of unreported transactions in a hospital. A raid on Upcharya Hospital, near Darshan Tower, Central Avenue, on Thursday evening, was carried as allegation surfaced that the unit violated Section 269ST of the Income Tax Act by accepting unreported cash payments exceeding Rs 2 lakh from patients. The operation, which extended late into the night, involvedexamining cash books, account registers, bill vouchers, and transaction records. Sources indicateofficials discovered entries showing cash receipts exceeding Rs 2lakh that were not properlyreported to tax authorities. Theinvestigation team is scrutinising five years of transaction datato determine whether the hospital systematically circumvented reporting requirements.

 

Under Section 269ST, introduced in 2017 to curb black money and promote digital transactions, no entity can receive cashpayments of Rs 2 lakh or morefrom one person in a single day, in a single transaction, or for oneevent or occasion. The restriction applies even if payments aresplit across multiple bills. Violations attract penalties under Section 271DA equal to 100 per cent of the amount received -- meaning a hospital accepting Rs 3 lakh in unreported cash faces a Rs 3 lakh penalty. “In the medical line, transactions of accepting amounts of more than Rs 2 lakhs in cash are happening very frequently,” a source said, suggesting widespread practices across Nagpur's private healthcare sector. Income tax sources confirmed that “income tax also has its eyes on other big hospitals in the city,” indicating additional enforcement actions may be forthcoming.

 

For hospitals, the Rs 2 lakh threshold applies comprehensively. If a patient pays Rs 1.5 lakh for surgery and Rs 1 lakh for hospitalisation on the same day in cash through separate bills, the total Rs 2.5 lakh violates Section 269ST. Similarly, paying Rs 1 lakh one day and Rs 1.5 lakh the next for the same treatment constitutes a violation. The COVID-19 pandemic temporarily exempted hospitals from these restrictions for treatment payments exceeding Rs 2 lakh, provided they collected PAN or Aadhaar details. However, this exemption expired May 31, 2021. The law provides one narrow exception: no penalty is imposed if the receiver proves “good and sufficient reasons” for contravention. Courts have shown flexibility when violations appear technical rather than intentional, with full transaction records and no evidence of tax evasion. However, this applies to good-faith errors, not systematic non-compliance. The investigation continued late Thursday night. Hospital management has not issued a public statement. The investigation team is expected to complete preliminary assessment within days, after which formal proceedings may commence if violations are confirmed. Other major Nagpur hospitals are reportedly reviewing their cash transaction protocols.