The Income Tax Department on Friday warned of a 100 per cent penalty against receiver of cash of Rs 2 lakh or above.
“Cash transaction of Rs 2 lakh or more is prohibited with effect from April 1. Contravention of Section 269ST (of the Income Tax Act of 1961) will entail a levy of 100 per cent penalty on the receiver of the amount,” the department said in an advertisement in leading dailies here.
Section 269ST has been inserted in the Act with effect from April 1 to restrict acceptance of cash of Rs 2 lakh or more by any person.
It disallows cash transaction of Rs 2 lakh or more by a person in a day in respect of a single transaction or 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.
The restriction shall not apply to any receipt by the government or any receipt by or from any banking company, post office savings bank or cooperative bank.
The newly inserted section 269ST in the Income Tax Act bans such cash dealings on a single day, in respect of a single transaction or transactions relating to one event or occasion from an individual.
“Contravention of Section 269ST would entail levy of 100 per cent penalty on receiver of the amount,” the tax department said in a public advertisement in leading dailies.
In the 2017-18 budget, finance minister Arun Jaitley had proposed to ban cash transaction of over Rs 3 lakh. This limit was lowered to Rs 2 lakh as an amendment to the Finance Bill, which was passed by the Lok Sabha in March.
The restriction is not applicable to any receipt by government, banking company, post office savings bank or co- operative bank, the tax department said.
The move to ban cash transaction above a threshold was aimed at curbing black money by discouraging cash transaction and promoting digital economy.
The tax department had started the email address ‘email@example.com’ in December last year post the demonetisation of 500 and 1000 rupee notes.