To curb the circulation of Black Money in our country’s economy, The Government of India on April 25 has, along with other measures, banned the acceptance of cash by any individual beyond Rs 2 lakhs under section 269ST of the Income Tax Act of India 1961 and has made it a punishable offense. If found guilty of receiving more than 2 lakhs in cash, then an equal amount of penalty in cash shall be imposed on the receiver.
Restriction on Receipt of Cash by Any PersonThe Government has put vigilance on high-value transactions. It is applicable for all occasions like birthday parties, marriage, and so on and for each transaction like sale of immovable property, sale of gold, holiday package, and so forth.
Note: Here in the above-mentioned case, the parameter of restriction is for the entire transaction and not necessarily for payment made in one single day. For Instance, a food caterer cannot accept beyond 2 lakhs or more in total (in cash) for marriage reception from a single-payer whether in a single day or spread over several days. However, he can receive more than 2 lakh but in other modes of payment. Interestingly payer doesn’t bear any responsibility as per the provisions of the Income Tax Act 1961. Moreover, an individual cannot make a gift in cash beyond 2 lakhs from one person on one occasion. Otherwise, he shall be subject to a penalty equal to the cash received.
It is worthwhile mentioning here that the payer does not have any responsibility under the provisions of section 269ST of the Income Tax Act of India 1961.The aforesaid restriction is not only applicable in case of payment of expenses in cash but also on acceptance and payment of loan beyond Rs 20,000 in cash. Below mentioned are the various types of restrictions put by the government of India on cash transactions. Disallowance in Case of a Self-employed Person for Business Expenses (if paid in cash)On a one/single day, Self-employed people cannot make a claim of any expenditure beyond Rs10,000/- if paid in cash to a person on a single day. In case of payments that are made to transporters, the tax law has provided a cap of Rs 35,000/-. The aforesaid cap is not only applicable in case of revenue expenditure but also for the acquisition of any fixed asset. Deduction in Case of Non-cash PaymentThe present law on Income Tax mandates deduction only if the same has been paid by any mode other than by cash.
Disallowance for Acceptance and Repayment of LoansAlong with the payment of expenses, tax laws have also put a cap on acceptance and payment of loans beyond Rs 20,000. Otherwise, you shall be penalized for the equivalent amount of loan paid in cash. Note: However, many transactions are exempted from this rule.Transactions with government, banks, corporations, or Government Companies and other entities as specified by the government are exempted from the aforesaid rule. Example: If you are paying EMI of your home loan of Rs 80,000 per month in cash, this rule shall not apply and you shall not be penalized.In conclusion, the government is proactive in curbing black money in the economy, but it is the responsibility of the general public also to keep a distance from black money.
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AuthorI am Amit Gupta. I like to write posts about chartered accountants' topic. |