Continuing the clampdown on cash transactions, the Centre proposes to further tighten payment norms by capping cash transactions at ₹2 lakh.
“In the official amendment to the Finance Bill, 2017, the government has proposed that limit of ₹3 lakh for cash transactions, beyond which it is illegal, be reduced to ₹2 lakh,” said Revenue Secretary Hasmukh Adhia on Tuesday.
In a series of tweets, he further said the penalty for violating this is a fine equivalent to the amount of transaction.
The move comes just four months after Prime Minister Narendra Modi announced demonetisation of ₹500 and ₹1,000 currency notes on November 8 last year.
The Finance Bill was taken up for discussion in the Lok Sabha and is likely to be passed following Finance Minister Arun Jaitley’s reply on Wednesday. Accepting the proposal of the Special Investigation Team headed by Justice MB Shah (retired), the Union Budget 2017-18 on February 1 had originally proposed to cap cash payment for a single transaction at ₹3 lakh, beyond which they would be illegal.
It has also proposed that any violations would be dealt with a penalty equalling the payment made in cash on the person and would be levied on the person wanting the payment in cash.
The proposal, which is likely to come into force from April 1, will impact sales of high value items such as jewellery, designer and luxury goods including clothes, cars as well as real estate.
Noting that India is a largely non-tax compliant society, Jaitley had in the Budget pointed out that though only 1.72 lakh assessees declare income of over ₹50 lakh, over 1.25 crore luxury cars have been sold in the last five years and over 2 crore Indians went abroad in 2015.