In order to promote digitisation system in the economy, the Central Government of India is making amendments in laws in every year’s budget.
Take an example of Budget of F.Y.2017-18, the government has introduced new section 269ST limiting cash transactions above Rs. 2 lakhs.
There are no exceptions to this. Even gift received in cash form close relatives above Rs. 2 lakhs come under the ambit of this section.
At present there are also certain other provisions which have either a cap or a complete ban on cash transactions.
Here are some of those transactions and the penalty you may attract for flouting the rules:
|Sr. no.||Transactions||Sections||Cap on cash transaction||Penalty for cash transaction|
|1||Disallowance for cash expenditure||40A(3)||Payment of any expenditure above Rs. 10,000||No deduction|
|Payments for plying, hiring or leasing of goods carriage above Rs 35,000|
|2||Determination of actual cost of asset||43(1)||Payment above 10,000 for purchase of asset||Such payment won’t be included in actual cost of asset (viz, No depreciation)|
|3||Prohibition on receiving cash||269ST||Rs. 2,00,000 or more||100% of amount received|
|Examples of Transactions referred to in (3):|
|(a) In aggregate from a person in a day||E.g. if a person receives Rs. 2.25 lakhs in cash for 2 different bills of Rs. 1 lakhs and 1.25 lakhs.||Then also Penalty is levied of 100% of amount received.|
|(b) In respect of single transaction||If there is single bill of Rs. 3.10 lakhs and cash is received on different days of Rs. 1.6 lakhs and 1.5 lakhs.||Then also Penalty is levied of 100% of amount received.|
|(c) In respect of transactions relating to one event or occasion from a person||E.g. If marriage is one occasion and a person receives amount of Rs. 3 lakhs.||Then penalty is levied of 100% of amount received.|
|To whom does Section 269ST applies?||To any person receiving cash above Rs. 2,00,000/-.|
|For which transactions is Section 269ST not applicable?||Restrictions on cash receipt of Rs. 2 lakhs or more w.e.f. 01.04.2017 shall not apply to-|
|a) Government, any Banking company, post savings bank or co-operative bank;|
|b) Transactions of the nature referred to in Section 269SS;|
|c) Such other persons or class of persons or receipts, as may be specified by the Central Government by notification in the Official Gazette.|
|4||Withdrawal of cash from Bank account||As per Press Release issued by Finance Ministry, Department of Revenue dtd. 05.04.2017, Cash withdrawals from Government, any Banking company, post savings bank or co-operative bank is permissible.||No contravention of the Section, hence no penalty shall be levied.|
|5||Prohibition on acceptance of cash loans, deposits, etc.||269SS||Rs. 20,000 or more||100% of amount received|
|6||Prohibition on repayment of loans or deposits in cash||269T||Rs. 20,000 or more||100% of amount paid|
|7||Health Insurance premium||80D||No cash payment allowed||No deduction|
|8||Investment linked deduction for capital expenditure||35AD||Payment above Rs 10,000 for any capital expenditure||No deduction|
|9||Donations to certain funds and charitable institutions||80G||Donations above Rs. 2,000||No deduction|
|10||Donations for scientific research or rural development.||80GGA||Cash donation above Rs. 10,000||No deduction|
|11||Donations by companies to political parties.||80GGB||No cash payment allowed||No deduction|
|12||Donations by any person to political parties||80GGC||No cash payment allowed||No deduction|
|13||Dealings in cash in immovable property transactions||269ST & 269T||Acceptance or repayment of loan, deposit or advance from any person above Rs. 20,000/- in cash||Penalty is 100% of the amount accepted or repaid.|
|(amended w.e.f. 01.06.2015)|
Credits : CA Shraddha Kothari
Disclaimer: This article is only for General Public Information and not a professional advice. Please consult your legal advisor before taking any decision. We are not finanacially liable for any loss incurred by any person.