The Narendra Modi government today moved a fresh proposal to cap cash transactions at Rs 2 lakh instead of the earlier sanctioned Rs 3 lakh. In the recently announced Union Budget, the government had allowed cash transactions of up to Rs 3 lakh. As per the fresh cap, citizens will have to pay a service charge on all cash transactions above Rs 2 lakh per month. Government had recently rolled out the Budget and today it announced as many as 40 amendments to the Finance Bill to which the Opposition parties objected when it was taken up for approval in the Lok Sabha, including Trinamool Congress (TMC), Congress, Biju Janata Dal (BJD) and others. These parties were against the proposal of amendments to 40 Acts as they believed it to be done in the form of back-door entry.
Revenue Secretary Hasmukh Adhia explained further, “The penalty for violating this is a fine equivalent to the amount of transaction. Governemnt has proposed that limit of Rs 3 lakhs for cash transaction beyond which it is illegal, be reduced to Rs 2 lakhs.”
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In his Budget speech on February 1, Finance Minister Arun Jaitley had proposed the transactions cap at Rs 3 lakh with effect from April 1. Jaitley defended the move to make amendments and proceeded to invoke first Lok Sabha Speaker G V Mavalankar. he said that the opposition’s objection is borne out the language in Article 110(1) and ever since its inception, the House has been debating the word ‘only’ used in the Article.
During the Budget announcement, the Central government had also introduced a new section – 269ST- under the Income-tax Act, 1961. The act enforced that no person shall receive an amount of Rs 3 lakh or more from another person in a single day or for a single transaction in any other form than electronic transfer, bank cheques or drafts. This is not for the first time when the Central government has changed its own directive on the issues related to cash transactions within days. This is not just a move to curb black money, but also an attempt to give yet another boost to the digital payments system in the country by encouraging people to go cashless as much as possible in their daily transactions.