In a bid to implement the government’s mission to make India a cashless or less

cash country and weed out corruption, the Income Tax Department has again
warned people to refrain from large cash transactions, contravention of which
may result in the levy of penalty or disallowance of tax deductions.
 
Following are the five transactions that Income Tax Department doesn’t want
you to do:
 
1) Don’t accept cash of Rs 2,00,000 or more in aggregate from a single person
in a day or for one or more transactions relating to one event or occasion.
 
2) Don’t receive or repay specified sum exceeding Rs 20,000 or more in cash
for transfer of immovable property and use account payee cheque or account
payee demand draft or use of electronic clearing system through a bank account.
 
3) Don’t pay more than Rs 10,000 in cash relating to the expenditure of
business/profession.
 
4) Don’t donate in excess of Rs 2,000 in cash to a registered trust or political
party.
 
5) Don’t pay health insurance premiums in cash.
 
Let us study these transactions in detail:

1) Don’t accept cash of Rs 2,00,000 or more in aggregate from a single person

in a day or for one or more transactions relating to one event or occasion.
Instead of cash, you are advised to use an account payee cheque or account
payee bank draft or use of electronic clearing system through a bank account for
such transactions. However, the said restriction shall not apply to government,
any banking company, post office savings bank, co-operative bank or a person
notified by the Central Government. Section 271DA of the Income Tax Act
provides for levy of penalty on a person who receives a sum in contravention of
the provisions of section 269ST. 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.
 
2) Don’t receive or repay specified sum exceeding Rs 20,000 or more in cash
for transfer of immovable property and use account payee cheque or account
payee demand draft or use of electronic clearing system through a bank account.
“Specified sum” means any sum of money receivable, whether as advance or
otherwise, in relation to a transfer of immovable property, whether or not the
transfer takes place. Contravention of the provisions of section 269SS will
attract penalty under section 271D. The penalty under section 271D shall be
levied of an amount equal to loan or deposit taken or accepted.
 
3) Don’t pay more than Rs 10,000 in cash relating to the expenditure of
business/profession. If such expenses exceeding Rs 10,000 are made in any
mode, other than by an account payee cheque was drawn on a bank, or account
payee bank draft, or use of electronic clearing system through a bank account,
no deduction shall be allowed in respect of such expenditure in the profit and
loss account.
 
4) Don’t donate in excess of Rs 2,000 in cash to a registered trust or political
party. Not only you won’t be able to claim deductions under section 80G of the
Income Tax Act for such donations, but appropriate actions would be initiated
against the trust or political party for encouraging money laundering.
 
5) Don’t pay health insurance premiums in cash. If you make any payment in
cash on account of a premium on health insurance facilities, you won’t get
deductions under Section 80D of the Income Tax Act.
 
The Government is time and again giving us opportunities to declare the
relevant information suo motto in the ITR forms. For eg: in the recently
notified ITR Forms for the AY 2019-20, one important declaration asked by the
government is that of the holding of shares in unlisted companies. The
Government is thus trying to correlate all the data and has access to all the
information about a particular assessee, which is in a way a very good initiative
to curb Black Money and Benami transactions.
 
Also, the Government has these days become very interactive and keeps issuing
Rules and Warnings to the assessee’s to not perform certain transactions which
might land them into unnecessary trouble. We, therefore, need to take care of
such warnings and avoid such transactions to avoid future hassles.
 
So, it is advisable for your own good not to violate the above rules, as the
Income Tax Department is seeking information regarding such violations, black
money or benami transactions. Also, all the tax departments are now being
centralized and there is an easy flow of information and assessee data from one
department to another because everything is online.