1. Cash transactions above Rs.
3 lakh not to be permitted.
Budget
2017 insert a new section 269ST, to provide that no person shall receive an
amount of three lakh rupees or more in cash –
a.
in
aggregate from a person in a day;
b.
in
respect of a single transaction; or
c.
in
respect of transactions relating to one event or occasion from a person,
The
proposed restriction shall not apply to Government, any banking company, post
office savings bank or co-operative bank.
The
above restriction shall not apply for transactions in the nature specified
under section 269SS (Mode of taking or accepting certain loans, deposits and
specified sum).
Penalty
for non-compliance
100%
penalty is proposed to be levied in case of non-compliance.
New
section 271DA is proposed to be inserted to effect the provision of penalty in
case of non-compliance under section 269ST. The said penalty shall however not
be levied if the person proves that there were good and sufficient reasons for
such contravention. It is also proposed that any such penalty shall be levied
by the Joint Commissioner.
The
provision related to tax collection at source at the rate of one per cent. of
sale consideration on cash sale of jewellery exceeding five lakh rupees is also
proposed to be omitted by amending the provisions of section 206C.
These
amendments will take effect from 1st April, 2017.
2. Cash expenditure allowable
to be reduced from Rs. 20,000 to Rs. 10,000.
Section
40A is proposed to be amend to provide the following:
i.
To
reduce the existing threshold of cash payment to a person from twenty thousand
rupees to ten thousand rupees in a single day; i.e any payment in cash above
ten thousand rupees to a person in a day, shall not be allowed as deduction in
computation of Income from "Profits and gains of business or
profession";
ii.
Deeming
a payment as profits and gains of business of profession if the expenditure is
incurred in a particular year but the cash payment is made in any subsequent
year of a sum exceeding ten thousand rupees to a person in a single day; and
iii.
Further
expand the specified mode of payment under respective sub-section of section
40A from an account payee cheque drawn on a bank or account payee bank draft to
by an account payee cheque drawn on a bank or account payee bank draft or use
of electronic clearing system through a bank account.
The
amendment will take effect from 1st April, 2018 and will,
accordingly, apply in relation to the assessment year 2018- 19 and subsequent
years.
3. In the presumptive income tax for small
traders, income to be taken as 6% of turnover which is received by digital or
banking means.
It is
proposed to amend section 44AD of the Act to reduce the existing rate of deemed
total income of eight per cent. to six per cent in respect of the amount of
such total turnover or gross receipts received by an account payee cheque or
account payee bank draft or use of electronic clearing system through a bank
account during the previous year or before the due date specified in
sub-section (1) of section 139 in respect of that previous year.
However,
the existing rate of deemed profit of 8% referred to in section 44AD of the
Act, shall continue to apply in respect of total turnover or gross receipts
received in any other mode.
This
amendment will take effect from 1st April, 2017 and will, accordingly, apply in
relation to the assessment year 2017-18 and subsequent years.
4. Restricting cash donations
Section
80G is proposed to be amend so as to provide that no deduction shall be allowed
under the section 80G in respect of donation of any sum exceeding two thousand
rupees unless such sum is paid by any mode other than cash.
Under
the existing provision, deduction under section 80G is allowed for cash payment
upto Rs. 10,000.
This
amendment will take effect from 1st April, 2018 and will, accordingly, apply in
relation to the assessment year 2018-19 and subsequent years.
5. Disallowance of
depreciation under section 32 and capital expenditure under section 35AD on
cash payment
Section
43 is proposed to be amend, to provide that where an assessee incurs any
expenditure for acquisition of any asset in respect which a payment or
aggregate of payments made to a person in a day, otherwise than by an account
payee cheque drawn on a bank or account payee bank draft or use of electronic
clearing system through a bank account, exceeds ten thousand rupees, such
expenditure shall be ignored for the purposes of determination of actual cost
of such asset.
Section
35AD (Deduction in respect of expenditure on specified business), to provide
that any expenditure in respect of which payment or aggregate of payments made
to a person in a day, otherwise than by an account payee cheque drawn on a bank
or an account payee bank draft or use of electronic clearing system through a
bank account, exceeds ten thousand rupees, no deduction shall be allowed in
respect of such expenditure.
These
amendments will take effect from 1st April, 2018 and will, accordingly, apply
in relation to the assessment year 2018-19 and subsequent years.
