Central Board of Direct Taxes clarifies on cash curb, Aadhaar

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New Delhi | Updated: April 6, 2017 5:10:17 AM

While a regular business is required to maintain books of account, the small taxpayers under the presumptive taxation scheme are exempt from the same, and are taxed on a declared income at a prescribed rate.

The legislative provisions are directed at small taxpayers including those that avail presumptive taxation scheme.

Among several changes made in the Finance Bill, 2017 to discourage cash transactions, the government has cut the presumptive taxation rate to 6% from 8% for the amount of turnover realised through cheque and digital mode, the Central Board of Direct Taxes (CBDT) said in a statement. Additionally, the Finance Bill prohibits businesses from claiming depreciation allowance or investment-linked deduction if the capital expenditure in cash exceeds `10,000, while halving the limit for revenue expenditure in cash to `10,000.

The legislative provisions are directed at small taxpayers including those that avail presumptive taxation scheme. While a regular business is required to maintain books of account, the small taxpayers under the presumptive taxation scheme are exempt from the same, and are taxed on a declared income at a prescribed rate.

Further, CBDT reiterated that a person cannot receive more than `2 lakh in cash and a contravention will attract penalty of a sum equal to the amount of such receipt. However, it clarified that the restriction was not applicable to any receipt by government, banking company, post office savings bank or co-operative bank. The restrictions will also not apply to withdrawal of cash from a bank, cooperative bank or a post office savings bank. The CBDT will issue necessary notification for the same.

“Restriction on receipt of cash donation up to `2,000 has been provided on political parties for availing exemption from Income-tax. Further, it has also mandated that any donation in cash exceeding `2,000 to a charitable institution shall not be allowed as a deduction under the Income-tax Act,” CBDT said in a statement.

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