Income Tax


Thursday, 13 April 2017

Restriction on Cash Transactions as applicable w.e.f 1st April 2017

Amendments relating to Cash Transactions wef 1st April 2017

1. Restrictions on cash transactions above Rs. 2,00,000/- :-
Any transaction including capital assets above Rs. 2,00,000/- will not be allowed, only through banking transaction.
There is a penalty of Amount equivalent to transaction amount above Rs. 2,00,000 if any transaction above Rs. 2,00,000/- is done in cash.

Imp Note that penalty is imposed on receiver of cash.

2. Restriction on Capital Expenditure in Cash :-
Any Cash payments of above Rs. 10,000/- for purchase of capital asset will be disallowed.That cost will be not added in the cost of asset for Income Tax purposes & Depreciation cannot be claimed on same. Ensure that payment for purchase of any capital asset of more than Rs. 10,000/- shall be through banking transaction only, Cash Payment will not be allowed.

3. Restriction on Cash Eexpenses above Rs. 10,000/- :-
Any expense of above Rs. 10,000/- done in cash will be disallowed. Only throughbanking transaction is allowable. Earlier for the limit was of Rs. 20,000/-.

4. 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. 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/-
therefore, to ensure that donation should be through banking transaction only for Income Tax purpose & etc.

For eg., if you sell any Assets like Bike for Rs. 2,50,000/- and receive the amount in cash. The amount of penalty levied on you will be same of Rs. 2,50,000/-.


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