The Supreme Court-monitored Special Investigation Team (SIT) has recommended a ban on cash transactions above Rs. 3 lakh and a cap on cash holding at Rs. 15 lakh, even as it acknowledged that the current restrictions on cash transactions above Rs. 20,000 in the form of tax deduction/ penalty are impracticable and have little effect.
“It is suggested that there should be a positive provision under the Income Tax Act that any transaction involving more than Rs. 3 lakh shall be invalid and illegal and would be a punishable offence, if amount is not paid by account payee cheque or account payee bank draft or use of electronic clearing system through a bank account,” the SIT said in its fifth report submitted in the court.
“Limits on cash transactions would discourage white-collared criminals or hardened criminals from money laundering and dealing in unaccounted/black money. This would also discourage corruption to some extent,” the SIT said.
Arguing for a cash-holding limit, the team said, “Law should provide that if any cash amount more than the prescribed limit is found, the same shall vest in the Union of India.” These stringent provisions, the team said, would have its own impact on “Income Declaration Scheme (IDS)” for disclosure of unaccounted money launched from June 1, 2016.
The SIT suggested that the government amend existing laws or enact a new law, for regulating the possession and transportation of cash, particularly putting a limitation on cash holdings for private use, and including provisions for confiscation of cash held beyond prescribed limits.
We want people to clean up their books: FM
Technology is a great facilitator for the taxman, finance minister Arun Jaitley said on Thursday, adding that the human contact between the taxman and the taxpayers is increasingly getting reduced.
“There is real time information and finding out details is not going to be very difficult. We want people to clean up their books,” he said, referring to the Income Declaration Scheme, 2016.
“I can only tell you that the technology for the taxman is a great facilitator. And therefore, in years to come with every passing day, for the taxman to detect violations is going to be relatively easier. Hopefully, if GST gets implemented, every stage of a business transaction is going to be recorded. And therefore, income generating out of that would have to be accountable,” the finance minister said at an event organised by FICCI.
However, Jaitley came across a lacklustre response when he had announced the first scheme, after the NDA government came to power in May 2014, to bring back black money stashed abroad — the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Just Rs. 4,147 crore was declared during the 90-day black money compliance window. Of this, the government could mop up Rs. 2,400 crore as taxes. “One of the objectives behind the 2015 Black Money Law was to offer an opportunity to assessees to comply…”