Tuesday, March 21, 2017

Brief on amendments relating to cash transactions which will take effect from 1st April 2017.

♦ Restrictions on cash transactions above Rs. 3,00,000/-

From 1st April onward any transaction (including transactions for capital assets) above Rs. 3,00,000/- shall be strictly done only through banking channels.
The penalty for transaction above Rs. 3,00,000/- is equivalent to amount of transaction.
For Eg. – If you sell your car for Rs. 5,00,000/- and take the whole amount in cash. Penalty of Rs. 5,00,000 will be levied.
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. 20,000/-
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 onward, 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.
Please note that all above changes will come into effect from the dates mentioned above after Assent of Finance bill 2017 by Honorable President of India and till that time these are proposed amendments.

Neeta Shah 
Contact Details
Office :- 022 - 2895 32 32 / 022 - 2894 87 47 / 
 022 - 28906363
Mobile Numbers
Neeta Shah - 9821411063
      Parth Shah - 9821911063
Kalpesh Shah - 9821106543
                                          Manish Sheth - 9821728465
                     Skype Id :- neeta.shah30
Shop No. 2 & 11 , Shailesh Apartments,
Borivali West, Mumbai – 400103, India.