Unsafe Cash Transactions

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In Indian Economy cash transactions has always been a reason for black money. Modi government has initiated various measures to restrict black money transactions and boost digital payments. In this article we look at cash transactions which can lead you in trouble. You may be charged high penalty for involving in such transactions. I named it as Unsafe Cash Transactions.

Image credit: Indiatoday. in
In order to avoid legal hurdles and penalties don't get into following Dangerous Cash Transactions. These are totally unsafe:-
Transaction no1:-  
  • You can not accept Cash of Rs.2,00,000 or more 
    • in aggregate from a person in a day; or
    • in respect of a Single transaction; or
    • in respect of transactions relating to One event or occasion from a person.
      • It means you can't make sale of Rs.2,00,000 in cash to a single person in a day.
      • Splitting of payments over several days is also prohibited. 
    •  Banks/ Governments are exempted from these provisions.
  • Consequences:-
    • Penalty is given under section 271DA of Income Tax Act.
    • Which is 100% of the amount received in cash.
    • Yani Jitna aayega utna hi chala jaega.
  • Example:-
    • Miss. Nimisha buys a Gold Chain worth Rs.2 lakh and pays the amount by cash to Mr. Shrawan on a single day in 2 equal installments of Rs.1 lac each. As Mr.Shrawan accepted cash worth Rs.2 lakh from a Single person and in a single day, he has to pay a penalty of Rs.2 lakh.
    • Mr. Piyush had an medical surgery and the hospital charges him a bill of Rs.5 lakhs. Mr. Piyush pays the bill in 5 installments of Rs.1 lac each on 5 different dates. Here cash received by hospital are less than 2 lakhs and have been received on different dates. Still the hospital  has to pay penalty because they received the payments with respect to single bill/ transaction.
Transaction no 2:-
  • You can not receive any Loan or Deposit of Rs.20,000 or more in cash as per section 269SS of Income tax Act.
    • This limit of Rs.20,000 is to be checked in aggregate in a year.
    • Banks/ Governments and few others are exempted from these provisions
  • Consequences:-
    • Penalty is given under section 271D of Income Tax Act.
    • Which is 100% of the amount received in cash on such Loan/Deposit.
  • Example:-
    • Shrawan accepted loan of Rs.10,000 and Rs.12,000 from Navya by way of Cash on 5th August and 12th August respectively. 
    • This is a violation of Sec 269SS and penalty of Rs.22,000 shall be payable by Shrawan.
Transaction no 3:-
  • Do not receive any loan or deposit, you can not Pay Back the amount of deposit or loan in cash if amount is Rs.20,000 or more, as per section 269T.
    • This limit of Rs.20,000 is to be checked in aggregate in a year.
    • Banks/ Governments and few others are exempted from these provisions 
  • Consequences:-  
    • Penalty is given under section 271E of Income Tax Act.
    • Which is 100% of the amount repaid in cash on such Loan/Deposit.
Transaction no 4:-
  • Dealing in buying/selling properties?
  • You can not receive advance in relation to immovable properties in Cash if amount is Rs.20,000 or more as per section 269SS.
    • Strictly don't sale property in cash if amount is Rs.20,000 or more.
  • Consequences:-
    • Penalty is given under section 271D of Income Tax Act.
    • Which is 100% of the amount received in cash on such Loan/Deposit. 
 Transaction no 5:-
  • This is only for Political Parties like AAP, BJP.
  • Political parties can not accept donation in excess of Rs.2000 in cash as per section 13A of Income Tax Act.  
Transaction no 6:-
  • This is only for Indian Companies.
  • Indian Companies can not make donation to political parties or electoral trust in cash.
  • If they do so then deduction under section 80GGB shall not be available.
  • Further if any person other than Indian company make donation to political parties or electoral trust in cash then deduction under section 80GGC shall not be available.
Transaction no 7:- 
  • If you are engaged in Business or Profession or running in School/Hospital via a trust.
  • Payment of any expenditure exceeding Rs.10,000 to a Single person in a single day is NOT allowed to be deducted from Business Income under section 40A(3).
  • Payment to Transport operators for plying, hiring or leasing of goods exceeding Rs.35,000 is NOT allowed to be deducted from Business Income under section 40A(3).
 Transaction no 8:-
  • Section 80D provides deductions for Buying medical insurance.
  • This deduction is not allowed if you pay premium in Cash. 
  Transaction no 9:-
  • If anyone donates to Funds or Trust approved for section 80G, then donation in cash can not be more than Rs.2000.
  • If you donate more than Rs.2000 in cash then you can not claim deduction under section 80G.
 Transaction no 10:- 
  • As per section 43(1), payment above Rs.10,000 for purchase of Business Asset can not be done in Cash.
  • If done, then the amount paid in cash will be reduced from the cost of asset.
  • It will reduce the amount of depreciation which is to be deducted in due course.
So whenever you deal in Cash don't forget to consider above protocols.
 !! Spend Wisely, this is your hard earned Money !!
[If you like this information, do share this, it can help others as well]
 [Source: Incometax.gov. in& taxworry. in]
!! I hope it was helpful !!

For further information contact at info@commerceinsiders.com
!! Thank You  !!
 
     
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    9 Comments
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