No cash transactions above Rs. 3 lakhs and no cash holding above Rs. 10 Lakh - SIT
THE Special Investigation Team observed, "It is a known fact that for purchasing articles of Rs.20,000/- or more, unaccounted / black money are used without bothering for tax deduction or penalty leviable under Section 271D or Section 271E of the I.T. Act. Question of levying penalty would arise only when such transaction comes to the knowledge of the I.T. Department, because it is difficult to find out or locate the same by the I.T. Department in a country where thousands of such transactions take place everyday. As such, these Sections have failed to control or have any effect on transactions or circulation of unaccounted money."
The SIT in its latest report to the Supreme Court suggested that there should be a positive provision under the I.T. Act that any transaction involving more than Rs.3,00,000/- (Rupees Three Lacs) shall be invalid & 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. Sit adds, “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. May be that corrupt persons would find out ways and means by accepting the gold or ornaments or constructed premises. However, it would prevent to a large extent funding of terrorism and organized crimes and transferring unaccounted money from one destination to other through Angadias or by any other method."
The SIT further observed, “For successful implementation of restricting accounted/unaccounted cash transaction, it is absolutely necessary to have reasonable restriction in holding cash and to fix the limit of cash holdings. It is known fact that a number of persons are holding cash of lacs of rupees and such holding is undoubtedly unaccounted.
In our view, it would be just and reasonable to have a total ban of cash transactions above Rs.3,00,000/- (Rupees Three Lacs). There should be specific provision in the Act that such transactions shall be illegal, invalid and punishable under the law."
The SIT further suggests:
1. If there is cash withdrawal of more than Rs.3,00,000/- (Rupees Three Lacs) from any bank, then that bank should consider it as a suspicious activity and should report it to Financial Intelligence Unit (FIU) & the concerned Income-tax Department.
2. The aforesaid limitation on the cash transaction can succeed only if there is limitation for cash holding. Maximum limit may be fixed between Rs.10 to 15 lacs. In any case, if any person or industry requires holding of more cash, it may obtain necessary permission from the Commissioner of Income-tax of the area.
Limitation on cash holding would have its deterrent effect. Persons holding more unaccounted money would like to disclose the unaccounted money as per the “Income Declaration Scheme (IDS)" which begins from 01st June, 2016 for such disclosure.
Suggestions on the SIT recommendations can be sent to sit_suggestions@nic.in
Will Babus stop taking bribes in cash and will net as stop distributing cash to buy votes?