In support of Indian government’s Mission “Cashless Economy” and “Anti-Corruption Measurements”, the Income Tax Department warned those who are doing large cash transactions and said it may lead to penalty or deductions not allowed in returns for such transactions.
Income tax department doesn’t want you to do some transactions in Cash beyond a specific limit. If you have done or violate the below rules, IT Department may ask information regarding such transactions / violations, and benami transactions.
Daily Transaction limit in cash is Rs. 2,00,000/- in cash
Do not Receive a total of 200,000 or more cash for one or more transactions involving one day or one incident or occasion. Instead of cash, you are required to use an Account payee Check or an Account Payment Bank Draft or Electronic Clearing System through a bank account for such transaction. However, this provision does not apply to the Government, the banking company, the post office savings bank, the cooperative bank or the central government. Section 271 of the Income Tax Act to pay a fine on a person receiving the amount contrary to the provisions of Section 269ST. The penalty is equal to the amount of such a receipt. However, a person cannot be penalized if there are good and sufficient reasons for such contradiction.
Transactions relating to Sale of property- Limits to Rs. 20,000/- in cash
Do not receive or pay a specific sum of the amount exceeding 20,000 or more cash in respect of sale / purchase of immovable property. Use the Account payee Check or an Account Payment Bank Draft or Electronic Clearing System through a bank account for such transaction. “Specific sum Amounts” means whether any amount of cash, whether advance or not, otherwise related to a fixed asset transfer or transfer. In contrast to the provisions of Section 269SS, the penalty under Section 271D will attract. Section 271D is penalized the loan or deposit equally taken or accepted.
Transactions relating to Business / Occupation – Limits to Rs. 10,000/- in cash
Do not pay more than Rs 10,000 in cash related to business / occupational expenses. If there are expenses incurred more than Rs. 10,000 and paid in cash, such expenses are not allowed to show in as cost in the profit and loss account.
Transactions relating to Donations – Limits to Rs. 2,000/- in cash
Do not pay more than Rs. 2000 in cash to trusts and political parties as fund donation. If you paid more than Rs. 2000 in cash to political parties and trusts, you can not get deductions under Section 80G of the Income Tax Act for such donations, and also IT Department treats it as money laundering and takes appropriate measures against the trust or political party for accepting more than in cash.
Transactions relating to Insurance Premium Payment
Do not pay health insurance premiums in cash. If you pay any cash in the premium account on health insurance facilities, you can not get it under Section 80D of the Income Tax Act.
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