The Finance Ministry on Saturday announced that all the transactions over Rs. 3 lakh in cash will attract 100 percent penalty. This decision came after the Union Budget 2017 was announced by the Finance minister Arun Jaitley. Hasmukh Adhia, revenue secretary of Ministry of Finance said, “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, the penalty would be Rs. 50 lakh.” He also added that this penalty will be levied on the receiver.
This is also applicable for purchases, wherein if a customer buys an expensive watch above Rs. 3Lakh, the seller will be paying the tax. This has been put in place so as to stop people from undertaking large cash transactions. Hasmukh Adhia previously said that for any transaction above Rs. 2 Lakh PAN card must be produced for submission and identity.
In the 2017-18 Union Budget, Arun Jaitley put forward the idea of inserting Section 269ST in the Income Tax Act to say 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”.
While these restrictions are applicable for all the private organizations this rule will not be applicable to any government, banking, post office, savings or co-operative banks.
