Restriction on cash transactions U/s 269ST new limit introduced

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As we all know in the budget 2017 honorable Finance Minister Arun Jaitley announce cash transaction limit Rs 3,00,000/- (3 Lacs). Budget Link is here.


Restriction on cash transactions

In India, the quantum of domestic black money is huge which adversely affects the revenue of the Government creating a resource crunch for its various welfare programmes. Black money is generally transacted in cash and large amount of unaccounted wealth is stored and used in form of cash.

In order to achieve the mission of the Government to move towards a less cash economy to reduce generation and circulation of black money, it is proposed to insert section 269ST in the Act to provide that no person shall receive an amount of three lakh rupees 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.

It is further proposed to provide that the said restriction shall not apply to Government, any banking company, post office savings bank or co-operative bank. Further, it is proposed that such other persons or class of persons or receipts may be notified by the Central Government, for reasons to be recorded in writing, on whom the proposed restriction on cash transactions shall not apply. Transactions of the nature referred to in section 269SS are proposed to be excluded from the scope of the said section. 

It is also proposed to insert new section 271DA in the Act to provide for 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. The said penalty shall however not be levied if the person proves that there were good and sufficient reasons for such contravention. It is also proposed that any such penalty shall be levied by the Joint Commissioner.

It 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 five lakh rupees.

These amendments will take effect from 1st April, 2017.
[Clauses 71, 83 & 84]

New Limit Rs 200000/- [ 2 Lacs ]
Now New Notification is issued that The cash transaction limit is Reduced to Rs 2,00,000/- [ 2 Lacs ]

Notification can be read on Income Tax India site. Click here
Direct Download Link


Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, 5th April, 2017.

PRESS RELEASE

Budget 2017 takes Steps to discourage Cash transactions & curb Black Money

Various legislative steps have been taken by the Finance Act, 2017 to curb black money by discouraging cash transaction and by promoting digital economy.

These prominently include placing restriction on cash transaction by introduction of new sections 269ST & 271DA to the Income-tax Act. It has been provided that no person (other than those specified therein) shall receive an amount of two lakh rupees 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.

Any contravention to the said provision shall attract penalty of a sum equal to the amount of such receipt. However, the said restriction is not applicable to any receipt by Government, banking company, post office savings bank or co-operative bank. It has also been decided that the restriction on cash transaction shall not apply to withdrawal of cash from a bank, co-operative bank or a post office savings bank. Necessary notification in this regard is being issued.

It has also been provided that any capital expenditure in cash exceeding rupees ten thousand shall not be eligible for claiming depreciation allowance or investment-linked deduction. Similarly, the limit on revenue expenditure in cash has been reduced from Rs.20,000 to Rs.10,000.

In order to promote digital payments in case of small unorganized businesses, the rate of presumptive taxation has been reduced from 8% to 6% for the amount of turnover realised through cheque/digital mode.

Restriction on receipt of cash donation up to Rs. 2000 has been provided on political parties for availing exemption from Income-tax. Further, it has also mandated that any donation in cash exceeding Rs.2000 to a charitable institution shall not be allowed as a deduction under the Income-tax Act.

(Meenakshi J. Goswami)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT.

Lets understand this section with Examples on above Notification 

269st Limit Rs 2 Lacs and penalty up to 100% if received

(a) in aggregate from a person in a day;
=> i.e you can received Rs 200000/- ( 2Lacs) from more than one person in aggregate but not from one person. like you billed Rs 1,10,000/- and Rs 98,000/- to a person in 2 diffent bill with different dates but received total Rs 2,08,000/- then penalty is levied.

(b) in respect of a single transaction; or
=> i.e any type of transaction being of same nature irrespective of dates received. like you have bill Rs 2,68,000/- to a person and received Rs 88,000/- and 1,80,000/- on different dates still penalty is levied.

(c) in respect of transactions relating to one event or occasion from a person,
=>i.e. amount received related to same event but received later from a person. for example you received Rs 2,48,000/- in part 78,000/- and 1,70,000/- after your marriage as an marriage gift from your father then it will be levied to penalty up to 100% of amount received irrespective of dates received as it is linked to one event i.e. your marriage.

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