Restrictions on cash transactions of Rs 2 lakh or more will not apply to payments for credit card bills, bank-appointed business correspondents and issuers of prepaid instruments, the revenue department said.
The Finance Act of 2017 prohibited the cash transaction of Rs 2 lakh or more with effect from April 1, 2017. However, a few exceptions were made.
Through a notice, the Department of Taxes on Income has exempted five entities from the scope of this Section.
These include receipts from a business correspondent on behalf of a bank or cooperative bank; And the receipt by a company or institution that issues credit cards against bills raised with respect to one or more credit cards.
Receipt of an agent by an issuer of prepaid payment instruments, receipt by a white label ATM operator of a point of sale and receipt that is not included in the total income in accordance with clause 17A of section 10 of the IT Act of 1961. They have been excluded from the scope of Section 269ST.
“The notice shall be deemed to have entered into force with effect from 1 April 2017,” the revenue department said. The notification is dated July 3.
Nangia & Co director Shailesh Kumar said that this would provide much needed relief to the banking sector as well as the rural sector and would remove the difficulties in these genuine cases.
“To relieve certain legitimate cases, which are also regulated by other government laws related to banking and payments, the government has issued a notice that exempts certain cash transactions from this limit,” Kumar said.
Previously, the department had said that the Rs 2 lakh restriction will not apply to receipts by the government, bank, post office bank or cooperative bank.
The section inserted in the Income Tax Law from the beginning of this fiscal prohibits cash transactions of Rs 2 lakh or more in a single day, with respect to a single transaction or transactions related to an event or occasion of an individual.
The violation of Section 269ST would imply the application of a 100% fine to the receiver of the amount.
The decision to prohibit cash transactions above a threshold was aimed at curbing black money by discouraging cash transactions and promoting the digital economy.
The tax department has already advised people who are aware of these cash deals to register with the tax department by sending an email to blackmoneyinfo@incometax.gov.in. This email address was started in December last year after the demonetization of 500 and 1,000 rupees notes.
He then asked people who had knowledge about converting black money blank to inform the government via this email ID. After the demonetization of 500 and 1,000 rupee bills, people with unaccounted wealth had illegally converted their black money into old banknotes into new banknotes of 500 and 2,000 rupees.
