A ban on cash transaction of more than Rs 3 lakh has been proposed in the Budget for 2017-18.
In his Union Budget 2017-18, Finance Minister, Sri Arun Jaitley, has promised a lot for common man, middle-class society and has taken various steps toward digitisation of India. However, in this hustle to digitise India, he has proposed introduction of a new penalty on cash transaction.
It has been proposed to insert Section 269ST in the Income-tax Act, 1961, in order to levy penalty of equal amount on cash receipt of Rs. 300,000 or more. In the Budget he said “no person shall receive an amount of Rs 3 lakh or more by way of cash in aggregate from a person in a day; in respect of a single transaction; or in respect of transactions relating to one event or occasion from a person”.
It means that any person can not withdraw more than Rs. 3 lakh from a same a bank in a day. However, the restriction of receipt of Rs. 300,000 will not apply to receipts by Government, any banking company, post office savings bank or co-operative bank.
This new section is similar to existing section 269T and section 269SS of the Act. However, withdrawing cash from a bank account is a cash receipt transaction. Accordingly, in our view, withdrawing cash from bank to the extent of Rs. 300,000 is permissible and any penny more than would be penalised.
Though the above penalty is going to effect the common man, this would not have been the intention of our honorable FM. We will have to wait for more guidelines from him in this regard.