New Delhi: In a bid to check generation of black money, a steep penalty awaits those accepting cash in excess of Rs 3 lakh, beginning April 1, to settle any transaction.
A ban on cash transaction of more than Rs 3 lakh has been proposed in the Budget for 2017-18.
In an interview to PTI, Revenue Secretary Hasmukh Adhia said the penalty for doing cash transaction will be steep and the receiver will have to pay an amount equivalent to the cash received.
"Supposing you do a transaction of Rs 4 lakh in cash, then the penalty would be Rs 4 lakh. If you do a transaction of Rs 50 lakh, penalty would be Rs 50 lakh," he said, adding that the penalty will be levied on the receiver.
So, if someone buys an expensive watch for cash, it is the shopkeeper who will have to pay the tax, he said, adding that the provision is to deter people from doing large cash transactions.
Demonetisation brought to account the stock of black money and now the government wants to stop future generation of the same.
The government, he said, will track all large cash transactions, and also curb the avenues of conspicuous consumption through cash.
People with large sum of unaccounted money usually spend it on holidaying or buying luxury items like cars, watches and jewellery. The new cash curbs will mean that such spending avenues are curtailed, disincentivising people from generating black money.
Adhia said that the previously notified rule of quoting PAN for any cash transaction above Rs 2 lakh stays.
Finance Minister Arun Jaitley had in his Budget for 2017-18 proposed to insert Section 269ST in the Income-Tax Act to state that "no person shall receive an amount of Rs 3 lakh or more by way of cash in aggregate from a person in a day; in respect of a single transaction; or in respect of transactions relating to one event or occasion from a person".
However, the restrictions will not apply to the government, any banking company, post office savings bank or co-operative bank.
Adhia said the Budget proposes to levy penalty on a person who receives Rs 3 lakh and above.
A panel of Chief Ministers headed by Andhra Pradesh Chief Minister Chandrababu Naidu had in its interim report just days before the Budget recommended a cap on cash transactions beyond a threshold and a tax on payments of over Rs 50,000 as a way of discouraging people from using physical currency.
However, the proposed restriction shall not apply to government, any banking company, post office savings bank or co-operative bank.