Restrictions On Cash Transactions Lifted For Some Cases

Restrictions on cash dealings of Rs 2 lakh or more will not apply to credit card bill payments, business correspondents appointed by banks and issuers of prepaid instruments.

As a follow up to the demonetisation drive last year, the Finance Act, 2017 had banned cash transactions of Rs 2 lakh or above with effect April 1, 2017 with few exceptions. The section inserted in the Income-Tax Act from the beginning of this fiscal year, banned cash dealings of Rs 2 lakh or more on a single day, in respect of a single transaction or transactions relating to one event or occasion from an individual.

Any contravention would entail levy of 100% penalty on receiver of the amount. The intent behind this move was aimed to eradicate black money and encourage digital transactions to displace large cash transactions.

Considering the hardships faced by people / entities in case of even genuine transactions, the income-tax department has exempted few entities from the aforesaid stipulation by a notification dated July 3, 2017.

These exemptions include:

1. receipts by a business correspondent on behalf of a banking company or cooperative bank;
2. receipt by a company or institution issuing credit cards against bills raised in respect of one or more credit cards.
3. receipt from an agent by an issuer of prepaid payment instruments;
4. receipt by a white label ATM operator from retail outlet and receipt which cannot be included in the total income under clause (17A) of Section 10 of the I-T Act, 1961, have been excluded from the purview of the Section 269ST.

The notification will have a retrospective effect from April 1, 2017.

The income- tax department has also advised people to tip-off the tax department regarding big cash deals by sending an email to blackmoneyinfo@incometax.gov.in.

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