03/04/2017
Restriction on Cash Transactions as applicable from 1st April 2017.
♦ Restrictions on cash transactions above Rs. 2,00,000/-
· From 1st April onward any transaction (including transactions for capital assets) above Rs. 2,00,000/- shall be strictly done only through banking channels.
· There is a heavy penalty of amount equivalent to transaction amount above Rs. 2,00,000 if any transaction above Rs. 2,00,000/- is done in cash.
· For example, if you sell your car for Rs. 5,00,000/- and receive the amount in cash. The amount of penalty levied on you will be Rs. 3,00,000/- .
· Note that penalty is imposed on receiver of cash.
♦ Restriction on cash donations to charitable trusts.
· Deduction at the rate of 50% is granted in case donation is made to a registered charitable or religious trust.
· From 1st April, any donation above Rs. 2,000/- in cash will not be eligible for tax deduction under Sec 80G of the income tax act. Earlier this limit was of Rs. 10,000/-
· Hence, if you want to make any donations and take income tax benefit of the same you have to ensure that you make such donations through banking channels
♦ Restriction on cash expenses above Rs. 10,000/-
· Any expense of above Rs. 10,000/- done in cash will be disallowed. Earlier, this limit was of Rs. 20,000/-.
♦ Restriction on Capital Expenditure done in cash
· From 1st April onwards, Cash payments of above Rs. 10,000/- done for purchase of capital asset will be disallowed. I.e. they cannot be added in the cost of asset for Income Tax purposes hence, depreciation cannot be claimed on same.
· You will have to ensure that payment for purchase of any capital asset of more than Rs. 10,000/- shall be done only through banking channels.
♦ Cash Books during assessment-
Further, considering the fact that government wants to discourage cash transactions it is likely that cash transactions will be looked upon in detail.
Hence, one is expected to maintain proper cash books.
Lok Sabha has passed the Finance Bill, w.e.f. April 1, 2017, a few Important aspects in brief are:
· The tax rate on income between Rs. 2.5-5 lakh will be 5 per cent from 10 per cent.
· A 10 per cent surcharge for individuals having income from Rs. 50 lakh to 1 crore.
· A simple one-page ITR form for individuals having a taxable income up to Rs. 5 lakh other than business income.
· No deduction will be allowed for investment in Rajiv Gandhi Equity Saving Scheme from Assessment Year 2018-19.
· Income tax officials can reopen tax cases for up to 10 years if search operations reveal undisclosed income over Rs. 50 lakh.
· Taxpayers who do not file their returns on time will have to shell out a penalty of up to Rs. 10,000 from AY 2018-19.
· The holding period of a property for qualifying as long-term gains will be reduced to two years, from three years.
· The government has cut down tax benefits borrowers enjoyed on properties let out on rent up to Rs. 2 lakh.
· Individuals will be required to deduct a 5 per cent TDS for rental payments above Rs. 50,000 per month from June 1, 2017.
· Partial withdrawals from National Pension System (NPS) will not attract tax.
· Aadhaar number will be a must while applying for PAN as well as filing of income tax returns by from 1 July .
