As per section 269ST, any person who enters into a transaction of Rs 2 lakh or more in cash will be liable to a penalty of an amount equal to the amount of the transaction.
For example: If you buy an expensive watch for cash of Rs 7 lakh, then it is the shopkeeper who will have to pay tax (penalty) of Rs 7 lakh. So, the tax rate here is 100%.
While this new section on the limits of cash transactions seems simple, we need to know about it in detail, as I believe it can have a significant impact on our daily financial lives.
With effect from April 1, 2017, no person will receive an amount of Rs 2 lakh or more;
(A) one person a day (or)
(B) in relation to a single transaction (OR)
(C) In relation to a transaction relating to an event or occasion from a person.
The new cash transaction limit does not apply if a person pays an account payee check (or) account payee bank draft (or) through a bank account or through another electronic mode through the use of an electronic clearing system ) Receives the amount through. Determined.
(i) any receipt by
(B) any banking company, post office savings bank or cooperative bank;
(ii) Transactions of the nature mentioned in Section 269SS;
(iii) Such other person or persons or class of receipts as the Central Government may by notification in the Official Gazette specify.
Please note that the penalty U / S 271DA will be levied on a person who receives Rs 2 lakh and above in cash. There will be an amount of penalty equal to the amount of such receipt. The said penalty however will not be levied if the person proves that there were good and sufficient reasons for such violation. Further please note that this fine will be levied by the Joint Commissioner.
Where an assessee incurs any expenditure for the acquisition of an unqualified property in respect of which a payment (or total of payments made to a person in a day), otherwise the account payment is paid through check / draft or electronic clearing system. Through bank account or such other electronic mode as may be prescribed, Rs. More than. 10000/-, such payment will not be eligible for general / additional depreciation under section 32.
[Section 40A(3) & 40A(3A) of the Income Tax Act, 1961:
The monetary limit on revenue expenditure in cash has been reduced from Rs. 20,000 to Rs. 10,000 (There is no change in the monetary limit related to cash payments up to Rs. 35000 / – for Transport contractors). There are also some exceptions to Rule 6DD of the Income Tax Rules. Consequently, any expenditure in connection with the payment (or the aggregate of payments made to a person in one day), otherwise using an account payer check / draft / electronic clearing system through a bank account or through such other electronic mode Can do with Has been determined, Rs. More than. 10000 / -, no deduction will be allowed in respect of such payment under sections 30 to 37 of the Income Tax Act, 1961.