In a major step towards curbing Black Money, Union Finance Minister Arun Jaitley introduced for many changes in Income Tax Laws in India. The focus has been shifted to encourage digital transactions and definitive attempt to curb cash transactions. Here we are listing some of them.
1. Reduction in deemed income from 8% to 6%
Section 44AD has been amended to reduce the existing rate of deemed total income of 8% to 6 % in respect of the amount of such total turnover received by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account.
2. Disallowance of cash expenses if exceeds Rs 10,000/-
Any expenditure in respect of which payment or aggregate of payments made to a person in a day exceeds Rs.10,000 shall not be allowed as deduction. Thus the threshold of cash payments to a person in a day has been reduced from Rs 20,000 to Rs 10,000.
3. Non- receipt of cash exceeding Rs. 2 Laks- new section 269ST
No person shall receive an amount of 2 lakhs rupees or more—
a) in aggregate from a person in a day
b) in respect of a single transaction
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.\
4. Penalty for accepting cash more than Rs. 2 Lakhs
Penalty of sum equal to the amount received in contravention of Sec. 269ST shall be imposed. The penalty shall be levied by Joint commissioner. However the penalty shall not be levied if the assessee proves that there was good and sufficient reasons for such contravention.
5. Banks to levy Rs 150 after four Cash transaction-
Some Banks including HDFC banks starts charging a minimum amount of Rs 150 per transaction for cash deposits and withdrawals beyond four free transactions in a month.
6. Restriction on cash Donations
Restriction on receipt of cash donation up to Rs. 2000 has been provided on political parties for availing exemption from Income-tax. Further, it has also mandated that any donation in cash exceeding Rs.2000 to a charitable institution shall not be allowed as a deduction under the Income-tax Act.
The above measures would put a lock on cash transactions and generation of black money. It is a big step towards cash-less economy.