Government to impose penalty of equal amount for receiving cash over Rs 3 lakh to curb black money

The government will levy huge penalties on transactions involving cash in excess of 3 lakhs from April 1. This move by government aims to curb black money and also to promote digital transactions. Revenue secretary Hasmukh Adhia has said the penalty for doing cash transaction will be steep and the receiver has to pay the amount equivalent to the cash received.

"Suppose, 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,  After the announcement of Demonetisation by Prime Minister Narendra Modi, there has been cases where large amount of black money has been found and the government is in plans to continue the same to put an end to black money.

Most of the black money hoarders spend large chunks of their cash on holidaying or on the purchase of luxury items like cars, watches, and jewelry. The new move means such steps will be curtailed and also discourage people from generating black money. Suppose if any person buys an expensive item for cash it is the shopkeeper who has to pay the excess amount (i.e if more than 3 lakh) as a tax. The Government will track all the large cash transactions to stop the expenditure on the lavish scale through cash. 

Adhia further added that previous rule of quoting PAN for transactions above 2 lakh will remain as such. Earlier, Finance Minister Arun Jaitley during his Annual Budget of 2017-18 has proposed to include Section 269ST in the Income-Tax Act wherein "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, government, any banking company, post office savings bank or co-operative bank are exempted from the restrictions. Before the budget panel of chief ministers headed by Andhra Pradesh chief minister Chandrababu Naidu in its interim report has suggested to put a cap on cash transactions beyond a threshold and to impose tax on payments above Rs.50,000 to minimize the usage of physical currency.

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