Cash transactions of more than two lakhs will be considered illegal and penalised, the government has proposed today.
In the government’s annual budget presented in February, Finance Minister Arun Jaitley had said cash transactions would be capped at three lakhs. In an amendment to the Income Tax Act, the government has called for reducing the limit to two lakhs starting next month.
The proposal is aimed at curbing black money and pushing the country towards digital transactions. The penalty will be 100 per cent -anyone who accepts more than 3 lakhs in cash will have to pay a fine equal to the entire amount received.
After the budget was presented, Revenue Secretary Hasmukh Adhia said the government would track all large cash transactions, and monitor sectors that see conspicuous consumption through cash.
Earlier, the government had made it mandatory for any cash transaction above 2 lakhs to include the PAN or income tax identification details of the recipient/person paying the cash.
However, the cash restrictions will not apply to the government, any banking company, post office savings bank or co-operative bank.