The Income Tax Department has given a warning to people so as not to indulge in any cash transaction that involves Rs 2 lakhs or more than that. It Department said that the one who receives the amount might have to give an equal amount of penalty against it. Cash transactions of Rs 2 lakh or more than that have been banned by the Finance Act 2017 effective from 1 April 2017 by virtue of provisions under section 269ST
Finance Ministry encourages people to report the cash dealings above the limit to it
There is also advice for the people who have the knowledge of these type of dealings email [email protected] to tip the tax department.
There is a new section of the Income Tax Act which is 269ST that bans this kind of dealings that happen on one day. It occurs in a single transaction that relates to one event from one person.
Contravention of the provision of the section 269ST attracts penalty of 100% on recipient of the cash
The tax department further clarified that any contravention of the Section 269ST would give a 100% penalty to the receiver of the amount.
In the Budget of 2017-18, Arun Jaitley, the Finance Minister proposed that the cash transaction that exceeds 3 Lakh be banned. It was then reduced to Rs 2 Lakh instead of Amendment of the Finance Bill passed in the month of March by the Lok Sabha.
The tax department also clarified any receipt by the government, savings of the post office or the banking company does not apply to this restriction.
This step to ban the cash transactions that are beyond a threshold limit was to limit black money with the help of discouraging the payment transaction which will, in turn, promote the digital economy.
An email id has been started by the tax department by the name [email protected]. It was started last year in the month of December after demonetization happened of the rupee notes of 500 and 1000. The tax department asked people to have all the know-how regarding the conversion of black money into white or black and also to keep the government informed about the dealings with the help of this email address.
After the step of demonetization of the 500 as well as the 1000 rupee notes, people who had some unaccounted wealth found ways and means to convert the black money that was in the old records of the new ones of 500 and 2000 rupees
The government launched a scheme called the Pradhan Mantri Garib Kalyan Yojana or the PMGKY which was an amnesty plan. Under this, people who had unaccounted cash could declare their wealth and be clean in front of the law. All they had to do was pay 50% as penalty and tax. Along with that, there is a mandatory deposit of 25% of the black money so that it is in zero-interest that has been born for four years.