Penalty on Cash Transactions of Rs 2 Lakh or More, Warns I-T Dept

The government has banned cash transactions of Rs 2 lakh or more from 1 April 2017, through the Finance Act 2017. (Photo: iStockPhoto)

The Income Tax department on Friday warned people against indulging in cash transaction of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

It also advised people with knowledge of such dealings to tip-off the tax department by sending an email to '[e-mail]'.

The government banned cash transactions of Rs 2 lakh or more from 1 April 2017 through the Finance Act 2017.

The newly-inserted section 269ST in the Income Tax Act bans such cash dealings on a single day, in respect to a single transaction or transactions relating to one event or occasion from an individual.

"Contravention of Section 269ST would entail levy of 100 per cent penalty on receiver of the amount," the Tax Department said in a public advertisement in leading dailies.

In the 2017-18 Budget, Finance Minister Arun Jaitley had proposed to ban cash transaction of over Rs 3 lakh. This limit was lowered to Rs 2 lakh as an amendment to the Finance Bill, which was passed by the Lok Sabha in March.

The restriction is not applicable to any receipt by government, banking company, post office, savings bank or co-operative bank, the tax department said.

The move to ban cash transaction above a threshold was aimed at curbing black money by discouraging cash transaction and promoting digital economy.

The tax department had started the email address [e-mail] in December last year post the demonetisation of 500 and 1000 rupee notes.