- April 14, 2017
- Posted by: Amit Mundhra CA
- Category: Income Tax
In Budget 2017, the Government has put many restrictions on entering into cash transactions between various parties. Following is the list of such transactions and implications thereon.
| S.N. | Nature of Transactions | Restrictions and Limits Imposed | Implications of crossing the limits |
| 1 | Payment made for any expenses [Section 40A(3)] | Upto Rs. 10000/- per person per day | If payment made to per person per day exceeds Rs. 10000/-, then total expenditure will be disallowed in Income Tax Act For making payments to transporters, Rs. 35000/- is the limit instead of Rs. 10000/-
E.g.: If you make payment of Rs. 15000/- towards Car service in a day and want to claim it as business expenditure, such expenditure will not be allowable.
|
| 2 | Payment made for Purchase of Assets [Section 43(1)] | Upto Rs. 10000/- per person per day | If payment made to any person per day exceeds Rs. 10000/- then such cash payment will not be included in cost of assets for the purpose of calculating depreciation.
Eg. : If you purchase a Car and pay booking amount of Rs. 21000/- in cash, then such Rs. 21000/- will not be included in cost of assets for the purpose of claiming depreciation.
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| 3 | Payment of Medical Insurance Premium [Section 80D] | If paid in cash, no deduction will be allowed. | If you pay medical insurance premium through cash, then no deduction will be allowable u/s 80D.
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| 4 | Payment towards donation [Section 80G] | If amount exceeding Rs. 2000/- is paid in cash, no deduction is allowable | If you pay donation exceeding Rs. 2000/- in cash, then deduction u/s 80G cannot be claimed in respect of such donation.
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| 5 | Receipt of payment towards any transaction [Section 269ST] | No amount can be received from any person exceeding Rs. 1,99,999/- | If any person receives amount exceeding Rs. 1,99,999/- in cash in following cases
– from a person in a day – in respect of a single transaction – in respect of transaction to one event or occasion
Penalty equal to amount received will be levied on such transaction.
E.g. : – Receipt of payment in cash of a single invoice of Rs. 200000/- or more (even individual payments received are less than Rs. 10000/- per day) – Receipt of cash from partnership firm – Receipt of cash for any personal transaction. |
Amit Mundhra FCA
Author is a fellow member of the ICAI and he can be contacted at amit.mundhra@gmail.com
