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.