In a bid to curb black money as well as to limit the number and amount of cash transactions, the government has come out with some new provisions and related rules and prohibited some types of cash payments in the Finance Acts. The effects of restrictions under provisions of income tax act are as follows.
Restrict cash transactions which results disallowances of expenses or deduction under chapter VIA of income tax act in computation of taxable income and allowing deduction to incentivise better compliance.Penalising cash transactions above threshold limits to create effective deterrence.
Important Cash Transaction Provisions wef 01/04/2017
Any donation above Rs. 2,000/- in cash will not be eligible for tax deduction under Sec 80G of the income tax act. Earlier this limit was of Rs. 20,000/-.Any expense of above Rs. 10,000/- done in cash will be disallowed. Earlier, this limit was of Rs. 20,000/-.From 1st April onwards, Cash payments of above Rs. 10,000/- done for purchase of capital asset will be disallowed. I.e. they cannot be added in the cost of asset for Income Tax purposes hence, depreciation cannot be claimed on same for Lorry cash payment limit is Rs.35000.Nobody can receive an amount more than Rs.2 Lakh or more by cash (269ST).In aggregate from a person in a single day or Single transaction or transaction relating to one event or occasion Penalty is equal to amount of receipt.
Cash Transaction Rules from 01-04-2017
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(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, other-wise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account.
For who is trading in Agriculture Items, I,e. Paddy, Maize, etc.
Government, any banking company, post office savings bank or co-operative bank. Transactions of the nature referred to in section 269SS; I,e. where the depositor and the acceptor are both Having, agricultural income and neither of them have any taxable income.
:- Framer can received more than 2 Lakh, But how a Business man paid because “ if a person withdraws in a day amount of Rs.2 lakhs or above, then penalty is levied”. Such other persons or class of persons or receipts, as may be specified by the Central Government by notification in the Official Gazette.
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