From 1 April, a steep penalty will be levied on those who accept cash above Rs 3 lakh. This step has been proposed in the Budget for 2017-18 in a bid to check the generation of black money.
Hasmukh Adhia, The Revenue Secretary, told that the penalty for transacting above the allowed limit would be steep and the burden will be borne by the receiver. Suppose, if a person does a transaction of Rs 4 lakh in cash, then the penalty would be of Rs 4 lakh. If a person does a transaction of Rs 50 lakh, then the penalty would be Rs 50 lakh. The penalty would be levied on the receiver as reported by India Today.
The government will track all the cash transactions above Rs 3 lakh and will stop the avenues they suspect to have consumption through cash.
Arun Jaitley, the Finance Minister, proposed to add Section 269ST in the Income Tax Act which states that no individual should receive an amount of Rs 3 lakh or more through cash in aggregate from any other individual in a single day with respect to the transactions related to any event or occasion.
These restrictions will not be applied to the government or banks, co-operative banks, post office savings bank accounts.
This decision is based on the recommendation of the Special Investigation Team which was set up by the Supreme Court. While presenting the Union Budget 2017-18 in Parliament, Arun Jaitley said that all the transactions above Rs 3 lakh would be banned.
The SIT had submitted its fifth report to the apex court on the steps needed to curb black money. The team headed by Justice MB Shah (retired) noted that a significant amount of unaccounted wealth is stored in cash.
The SIT had considered the provisions which exist in various countries and also have found different reports and observations of courts regarding cash transactions. It felt that there is a need to cap the cash transactions, so it recommended a total ban on cash transactions of Rs 3 lakh and above. Also, the act will be framed to declare such transactions as punishable under law.