New limits on cash transactions

New limits on cash transactions

FPJ BureauUpdated: Thursday, May 30, 2019, 09:33 AM IST
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New Delhi: The Government is amending the Income Tax Act to disallow deduction of any donations made in cash exceeding Rs 2,000. Section 80G of the Act so far allowed deduction of the donation up to Rs 10,000 in cash as expenditure.

For disincentivising cash transaction, another amendment in Section 40A reduces the existing threshold of cash payment to a person from Rs 20,000 to Rs 10,000 in a single day. It says any payment in cash above Rs 10,000 will not be allowed as deduction in computing the income for tax purpose. These amendments will, however, take effect from April 1, 2018 and applicable to the assessment year 2018-19 and thereafter.

In order to curb generation and circulation of black money, Section 269ST of the Act has been amended with effect from April 1, 2017 barring a person to receive in cash Rs 3 lakh or more in aggregate from a person in a day in respect of a single transaction or transactions relating to one event.

A proviso, however, says that this restriction shall not apply to government, banks, including cooperative ones, and post office savings bank.

The amendment proposes a penalty equal to the amount of such receipt of Rs 3 lakh or more unless the person proves “good and sufficient reasons” for such contravention. It says the penalty shall be levied by no officer lower than the Joint Commissioner, so as to prevent unnecessary harassment in case of the genuine dealings.

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