Ban on cash transaction above Rs 3 lakh from April 1

Tribune News Service

New Delhi, February 1

In line with the government policy of moving towards a "less cash" economy to check black money, Finance Minister Arun Jaitley today announced in his Budget speech for 2017-18 that no transaction above Rs 3 lakh will be permitted in cash.

A proposal to mandate all government receipts through digital means, beyond a prescribed limit, was under consideration, Jaitley said.

Accepting a suggestion by the Special Investigation Team on Black Money to ban cash transactions above Rs 3 lakh, the Finance Minister proposed an amendment to the Income Tax Act in the Finance Bill.

"It is proposed to provide that no person shall receive payment or aggregate of payments of an amount of Rs 3 lakh or more from a person in a day, or in respect of a single transaction, or in respect of transactions relating to one event or occasion, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account", the amendment said.

The Finance Minister also proposed to limit the cash expenditure allowable as deduction, both for revenue as well as capital expenditure, up to Rs 10,000. However, traders body CAIT said that reduction in limit of cash expenditure of Rs 10,000 would prove to be counterproductive and would stall smooth business activities.

Similarly, the limit of cash donation which can be received by a charitable trust is being reduced from Rs 10,000 to Rs 2,000. Jaitley said the government was considering the option of amending the Negotiable Instruments Act to ensure that the payees of dishonoured cheques were able to realise the payments.

The Finance Minister also announced several anti-graft and rationalisation measures in the field of income tax.

Continuing the government's crackdown on the dishonest and the corrupt, the Budget proposed that if an accountant or a merchant banker or a registered valuer furnishes incorrect information in a report or certificate, he shall be liable to a penalty of Rs 10,000 for each such default.

It is proposed to provide for grant of interest in case of refund of excess payment of TDS. At the same time, to ensure timely filing of returns of income, a fee will be levied in case of delay in filing the return.

To promote digital payments, the Finance Minister said the government would launch two new schemes to promote the usage of Bhim app including a referral bonus scheme for individuals and a cashback scheme for merchants.