Restrictions on Cash Transactions in Income Tax
The Government of India has been working towards promoting digital & cashless economy in the country. To attain this objective, various provisions have been made under Income Tax Act, 1961. We have summarized some of those provisions in this article which restricts cash transactions under Income Tax Act.
|
Particulars |
Section |
Limits |
Effect of crossing the Limits prescribed |
|
Donations received by political parties in cash |
Section 13A |
Rs. 2,000 |
Exemption shall not be allowed |
|
Payments in cash in specified businesses |
Section 35AD |
Rs. 10,000 |
No Deduction shall be allowed |
|
Deduction of insurance premium, Health Insurance Premium paid in cash |
Section 36, 80D |
Rs. 0 |
No Deduction shall be allowed |
|
Contribution to political party in cash |
Section 80GGB, 80GGC |
Rs. 0 |
No Deduction shall be allowed to Donor |
|
Payment for any revenue expenditure in cash |
Section 40A(3) |
Rs. 10,000 |
The expenditure will be disallowed if payment is made in cash exceeding Rs. 10,000 |
|
Payment for capital expenditure in cash |
Section 43(1) |
Rs. 10,000 |
If capital expenditure is paid in cash exceeding Rs. 10,000, such expenditure shall be ignored for calculation of Actual cost- thus, denial of depreciation |
|
Donation to Charitable institutions in cash |
Section 80G |
Rs. 2,000 |
Deduction shall not be allowed to Donor |
|
Donation for scientific research or rural development in cash |
Section 80GGA |
Rs. 10,000 |
No deduction shall be allowed to Donor |
|
Loan taken or repaid in cash |
Section 269SS, 269T |
Rs. 20,000 |
Penalty equal to 100% shall be levied |
|
Cash received for transactions |
Section 269ST |
Rs. 2,00,000 |
Penalty equal to100% shall be levied |
|
Presumptive Tax Scheme |
Section 44AD |
|
Presumptive profit shall be deemed at 6% instead of 8%, if the payment is received through banking channel |
|
TDS on cash withdrawals from banks & post office |
Section 194N |
Rs. 20 Lakhs/ Rs. 1 crore |
TDS @ 2% on cash withdrawals in excess of Rs. 1 crore
|
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