NEW DELHI: The government is set to ban cash transactions over Rs 3 lakh as it seeks to clamp down on black money in the economy.
The Supreme Court-appointed Special Investigation Team (SIT) on black money had recommended the move. The government, however, is yet to decide on the SIT’s other recommendation to bar cash holdings over Rs 15 lakh due to opposition from trade and industry, government sources told media.
“There are concerns that this will result in harassment by tax officials. We are looking into feedback that we have received,” a senior officer told media.
The Rs 3 lakh limit is aimed to ensure that transactions are made using credit or debit cards, cheques or drafts which can be easily tracked. Despite the crackdown on use of unaccounted money, authorities continue to unearth several transactions involving purchase of jewellery or even cars in all-cash deals, officials admitted. The finance ministry is separately trying to promote the use of plastic money to reduce the volume of cash transactions and recently did away with transaction charges for government services.
In the past, businesses have cited payments to workers and vendors, especially smaller players, to justify large cash holdings. But the argument is seen to have become weak in the wake of a spurt in the number of bank accounts, especially after Jan Dhan was launched two years ago. “Since there are concerns, we need to factor them,” the officer said.
The government has already initiated several steps including banning payment of cash advance of more than Rs 20,000 for property transactions. The move followed its experience in income tax raids where unaccounted cash was often attributed to “recently-concluded property transactions”. A similar limit has been placed on repayment of loans to banks.
The SIT suggested the twin moves citing global experience, especially in Europe where several countries such as France and Italy allow cash transactions only up to a certain limit.
Credits ET Realty