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How Arun Jaitley's budget proposals will affect cash transactions
The minister proposed to ban all cash transactions above Rs 3 lakh beginning April 1, 2017. The decision to ban cash transactions beyond a threshold is based on the recommendation of the Special Investigation Team on black money that was set up by the Supreme Court.
How Arun Jaitley's budget proposals will affect cash payments

How Arun Jaitley's budget proposals will affect cash payments

Finance Minister Arun Jaitley on Wednesday presented his fourth Union Budget in the Lok Sabha and announced a slew of new measures which will affect use of cash in transactions. We take a look at the announcements.

  • The minister proposed to ban all cash transactions above Rs 3 lakh beginning April 1, 2017. The decision to ban cash transactions beyond a threshold is based on the recommendation of the Special Investigation Team on black money that was set up by the Supreme Court. The restriction on cash payment comes more than a year after the government made PAN cards mandatory for making purchases above Rs 2 lakh. Hence, the current step may not impact the situation much, say experts.
  • The limit for cash payments to be eligible for taxation has been reduced. Any cash payment 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". The existing threshold stands at Rs 20,000.
  • Any expenditure incurred in a particular year but cash payment made in any subsequent year of a sum exceeding ten thousand rupees to a person in a single day will be deemed as profits and gains of business and profession.
  • 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.


 

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