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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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