Banking

Government bans cash transactions above Rs. 3 Lacs w.e.f. 1st April 2017

01.02.2017

The Union Government in its the budget for the Year 2017-2018 has yet again cracked the whip on black money by declaring that all cash transactions over and above Rs. 3 lacs are banned from 1st april 2017 onwards. This is the second major attempt after the demonetization of rupees 500 and 1000 rupees notes for curbing the menace of black money.

The Finance Minister Mr. Arun Jaitley while presenting the budget in Parliament stated that the decision to ban cash transactions beyond a threshold is based on the recommendation of the Special Investigation Team (SIT) on black money which was set up by the Supreme Court. The SIT, headed by Justice M B Shah (retired), had submitted its fifth report to the Supreme Court on steps needed to curb black money and recommended a total ban on cash transactions of Rs 3 lakh and above and proposed that an Act be framed to declare such transactions as illegal and punishable under law.

The new Amendment proposes to insert Section 269ST in the Income Tax Act, 1961 (Act) to provide that no person shall receive an amount of Rs 3 lakh or more,(a) in aggregate from a person in a day; (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 account payee bank draft or use of electronic clearing system through a bank account. However, the following restriction will not be applicable to Government, any of the banking companies dealing in financial transactions, post office savings bank or co-operative bank. It further states that the Central government should be notified with reasons to be recorded in writing if such other persons or class of persons or receipts for whom the proposed restriction on cash transactions shall not apply, which clearly implies that they need to maintain records for doing such kind of transactions after 1st April 2017.

However, transactions of nature referred to in Section 269SS of Act are proposed to be excluded from the implication of the said section and there is a proposal of inserting a new Section 271DA in the Act to provide for the levy of penalty on a person who receives a sum in contravention of the provisions of the proposed section 269ST. The penalty is proposed to be a sum equal to the amount of such receipt which means that if the accused is unable to provide the sufficient reasons, then total sum received will be ceased by the government. However, if the person proves that there were good and sufficient reasons for such contravention, the said penalty shall not be levied. It is also proposed that any such penalty shall be levied by the Joint Commissioner. The amendment is also proposed to consequentially amend the provisions of section 206C to omit the provision relating to tax collection at source at the rate of one per cent of sale consideration on cash sale of jewellery exceeding Rs 5 lakh.

The issue of black money is chronic disease which has eaten the progress of nation and it is to be seen in future that how far these steps will curtail the ever growing shadow of black money on economy of India.

Tags : Cash transaction Limit

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