Even though the government is striving hard to move towards a cashless economy, we Indians still love cash transactions. According to a report, many citizens and businesses are still dependant on cash. The Government has come up with many initiatives to make citizens adopt digital payment methods, but there’s a long way to go.
While we are all used to cash transactions, unfortunately in some cases, this could land you in a problem. There are some don'ts for cash and you should be aware of them.
1. The acceptable limit
According to the laws of cash transactions, an individual cannot accept cash worth Rs 2 lakhs or more in total from a single person in a day or even for the same event through different transactions in cash. Earlier, the limit was Rs 3 lakhs and it was reduced to Rs 2 lakhs in March 2017. Violating this law will attract a penalty equal to the amount that is received.
2. Receive or repay
You will be charged a penalty from the income tax department, if you receive Rs 20,000 or more in cash for the transfer of an immovable property.
In this case, the receiver of the cash will be charged a penalty and not the payer. So, whenever you receive a cash payment of large size it is better to say no to it.
As per rules, an individual cannot pay more than Rs 10,000 in cash for business or professional expenditure. In case you pay more than Rs 10,000 in cash, you will be asked to pay a penalty.
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According to the income tax laws, you cannot pay donations more than Rs 2,000 in cash to a registered trust or a political party. Doing so violates the law. In case you pay a donation of more than Rs 2,000 in cash, you will not be allowed to claim deductions under section 80G.
Finance Minister Arun Jaitley had proposed to ban cash transactions of Rs 3 Lakhs or more. This limit was reduced to Rs 2 Lakhs in March 2017. A new panel Section 271DA was introduced to ensure compliance with the provisions. Under this section, a penalty will be imposed equal to the amount that is received by the receiver.
The section also mentions that the penalty will not be imposed if the person proves that there were good and sufficient reasons for the violation of the rules. The move to restrict cash transactions are aimed to check black money and to promote digital transactions.