Restriction on cash transactions
As a measure to discourage generation and circulation of black money, a new provision has been introduced to curb cash transactions of 200,000 Indian rupees (INR) or more and consequential penalty provisions for contravention of such provisions.
Accordingly, no person shall receive an amount of INR 200,000 or more in (i) aggregate from a person in a day, (ii) respect of a single transaction, or (iii) respect of transactions relating to one event or occasion from a person. A person will have to transact for amounts above the prescribed limit by way of an account payee cheque or account payee bank draft or use of an electronic clearing system through a bank account. The provision shall not apply in case of:
- Any receipt by the government, any banking company, post office savings bank, or cooperative bank.
- Any other persons or class of persons or receipts that may be notified by the Central Government.
A penalty shall be levied on a person who receives a sum in contravention of provisions, and the penalty shall be equal to the amount of such receipt. However, the penalty shall not be levied if the person proves that there were good and sufficient reasons for such contravention.
On donation of a certain amount to certain approved funds, charitable institutions, etc., an individual can claim a deduction of 50% to 100% of the amount donated, subject to restrictions provided by the law. Deductions for donations to funds and charitable institutions in excess of INR 2,000 are to be allowed only if the donation is made other than in cash.