#IncomeTax #CashTransactions #Economy #CashCleanUp #BjpGovt #PmModi
CASH TRANSACTIONS ABOVE TWO LAKHS WOULD NOT BE ALLOWED NOW...
Income tax data shows that only 3% of India's population pays income tax. Most of the people who dealt in cash transactions could easily avoid income tax as there was no way to determine about their income. To bring those tax evaders under in this fold a new developments is to be announced soon. Every Indian must know about this new developments in income tax area as every transaction above 2 Lakhs Indian Rupees would have to go through banking channels. If one receives about 5 Lakhs in cash would be charged penalty of 3 lakhs which in other words is that the fine for violating this law would be equivalent to one's transaction amount. Above the limit of two lakhs if you do cash transactions of five lakhs in a seven lakh cash transaction then you would have to pay five as you have crossed the limit by five lakhs.
In order to clean up illegal cash transactions the following steps have been taken by Indian government.
Restriction on Cash Transactions as applicable from 1st April 2017
Here is the brief on amendments relating to cash transactions which will take effect from 1st April 2017.
Restrictions on cash transactions above Rs. 2,00,000/-
From 1st April onward any transaction (including transactions for capital assets) above Rs. 200000/- shall be strictly done only through banking channels.
There is a heavy penalty of amount equivalent to transaction amount above Rs. 200000 if any transaction above Rs. 200000 is done in cash.
For eg., if you sell your car for Rs. 5,00,000/- and receive the amount in cash. The amount of penalty levied on you will be Rs. 300000/- .
Note that penalty is imposed on receiver of cash.
Restriction on cash donations to charitable trusts.
Deduction at the rate of 50% is granted in case donation is made to a registered charitable or religious trust.
From 1st April, any donation above Rs. 2,000/- in cash will not be eligible for tax deduction under Sec 80G of the income tax act. Earlier this limit was of Rs. 20,000/-
Hence, if you want to make any donations and take income tax benefit of the same you have to ensure that you make such donations through banking channels
Restriction on cash expenses above Rs. 10,000/-
Any expense of above Rs. 10,000/- done in cash will be disallowed. Earlier, this limit was of Rs. 20,000/-.
Restriction on Capital Expenditure done in cash
From 1st April onwards, Cash payments of above Rs. 10,000/- done for purchase of capital asset will be disallowed. I.e. they cannot be added in the cost of asset for Income Tax purposes hence, depreciation cannot be claimed on same.
You will have to ensure that payment for purchase of any capital asset of more than Rs. 10,000/- shall be done only through banking channels.
Cash Books during assessment-
Further, considering the fact that government wants to discourage cash transactions it is likely that cash transactions will be looked upon in detail.
Hence, one is expected to maintain proper cash books.
Please note that all above changes will come into effect from the dates mentioned above after Assent of Finance bill 2017 by Honorable President of India and till that time these are proposed amendments.
Here is the brief on amendments relating to cash transactions which will take effect from 1st April 2017.
Restrictions on cash transactions above Rs. 2,00,000/-
From 1st April onward any transaction (including transactions for capital assets) above Rs. 200000/- shall be strictly done only through banking channels.
There is a heavy penalty of amount equivalent to transaction amount above Rs. 200000 if any transaction above Rs. 200000 is done in cash.
For eg., if you sell your car for Rs. 5,00,000/- and receive the amount in cash. The amount of penalty levied on you will be Rs. 300000/- .
Note that penalty is imposed on receiver of cash.
Restriction on cash donations to charitable trusts.
Deduction at the rate of 50% is granted in case donation is made to a registered charitable or religious trust.
From 1st April, any donation above Rs. 2,000/- in cash will not be eligible for tax deduction under Sec 80G of the income tax act. Earlier this limit was of Rs. 20,000/-
Hence, if you want to make any donations and take income tax benefit of the same you have to ensure that you make such donations through banking channels
Restriction on cash expenses above Rs. 10,000/-
Any expense of above Rs. 10,000/- done in cash will be disallowed. Earlier, this limit was of Rs. 20,000/-.
Restriction on Capital Expenditure done in cash
From 1st April onwards, Cash payments of above Rs. 10,000/- done for purchase of capital asset will be disallowed. I.e. they cannot be added in the cost of asset for Income Tax purposes hence, depreciation cannot be claimed on same.
You will have to ensure that payment for purchase of any capital asset of more than Rs. 10,000/- shall be done only through banking channels.
Cash Books during assessment-
Further, considering the fact that government wants to discourage cash transactions it is likely that cash transactions will be looked upon in detail.
Hence, one is expected to maintain proper cash books.
Please note that all above changes will come into effect from the dates mentioned above after Assent of Finance bill 2017 by Honorable President of India and till that time these are proposed amendments.
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