In a bid to curb black money and run the government’s welfare programs smoothly, FM Arun Jaitley in his budget speech today announced some restrictions on cash transactions up to a certain limit. The following amendments will take effect from 1st April 2017.
The quantum of domestic black money is getting huge which had adversely affected the revenue of the government, because of which the government felt scarcity of resources for its various welfare programs. During the demonatisation phase, it was noticed that black money was transacted in huge cash dealings and a large amount of unaccounted wealth was not know to the government as it was being used in the 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 Rs 3 lakh 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.
The following restriction will not be applicable to government, any of the banking companies dealing in financial transactions, post office savings bank or co-operative bank. Further, the Central government should be notified with reasons to be recorded in writing if such other persons or class of persons or receipts for whom the proposed restriction on cash transactions shall not apply, which means that they need to maintain records for doing such kind of transactions after 1st April 2017.
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However, transactions of nature referred to in section 269SS are proposed to be excluded from the scope of the said section.
There is a proposal of inserting a new section 271DA in the Act to provide for the 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 which means that if the accused is unable to provide the sufficient reasons, then total sum received will be ceased by the government. However, if the person proves that there were good and sufficient reasons for such contravention, the said penalty shall not be levied. 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 Rs 5 lakh.