The recommendation comes from the Special Investigation Team as part of its effort to clamp down on the use of black money in the economy
Indivjal Dhasmana | New Delhi | August 24, 2016 | Last Updated at 06:38 IST | Business Standard
The government is examining a recommendation by the special investigation team (SIT) to ban cash transactions of over Rs 3 lakh to clamp down on black money, the top Central Board of Direct Taxes (CBDT) official said on Tuesday.
Addressing an Assocham event, CBDT Chairperson Rani Singh Nair also favoured the proposal to advance the presentation of Union Budget to January, saying it will bring in “more efficiency” as the public expenditure will start from first day of the financial year. A key international tax official also said India-Singapore tax treaty would be broadly on the same lines as that with Mauritius, though there could be some minor differences. On banning cash transactions of over Rs 3 lakh, Nair said, “SIT recommendations are under consideration.” The income-tax department, she said, has already put a one per cent tax, to be collected at source (TCS), on cash transactions of over Rs 2 lakh. Quoting PAN is also mandatory for any mode of payment. “All these aspects are part of SIT recommendations to stop use of cash in the economy,” she said.
CBDT had earlier clarified that no tax would be collected at source when cash component of the payment for goods and services is less than Rs 2 lakh even if the total consideration is more than this amount.
The SIT, headed by retired judge M B Shah, last month submitted its fifth report to the Supreme Court on steps needed to curb black money. Noting that a large amount of unaccounted wealth is stored in cash, the SIT said: “Having considered the provisions which exist in this regard in various countries and also having considered various reports and observations of courts regarding cash transactions, the SIT felt that there is a need to put an upper limit to cash transactions.” It recommended a total ban on cash transactions of Rs 3 lakh and above and that “an Act be framed to declare such transactions as illegal and punishable under law”.
SIT had also suggested an upper limit of Rs 15 lakh on cash holding. In case any person or industry requires holding more cash, it may obtain necessary permission from the Commissioner of Income Tax of the area, it had recommended.
Nair said: “There has been a change in the mindset of young people…These young people don’t want to hoard money any more, something that has to be done if it is black. If they have money, they want to flaunt it. This is a change from the previous mindset of people hoarding black money.”
The chairperson also said that the goods and services tax would reduce generation of black money.