Finance Act, 2017: No Curb on Withdrawals from Banks, Co-operative Banks and Post Offices
Indian Government in an attempt to curb black money has taken stringent steps to discourage cash transactions but have not placed any restrictions on cash withdrawals from banks, co-operative banks and post office savings bank.
Restriction on cash transaction
The Finance Act, 2017 has inserted Section 269ST & 271DA to the Income Tax Act, 1961. These sections place a restriction that no person shall receive an aggregate of Rs. 2,00,000. or more in cash, from a person in a day, in a single transaction or in respect of transactions relating to one event or occasion from a person.
Transaction above Rs. 2,00,000 can be done by an account payee cheque/ account payee bank draft / electronic clearing system through a bank account.
Moreover, any capital expenditure in cash of more than Rs. 10,000 shall not be eligible for claiming depreciation allowance or investment-linked deduction.
Further, the limit on revenue expenditure in cash has been reduced to Rs.10,000 from the current Rs. 20,000
Restriction on receipt of cash donation up to Rs. 2000 has been provided on political parties for availing exemption from Income-tax. Further, it has also mandated that any donation in cash exceeding Rs.2000 to a charitable institution shall not be allowed as a deduction under the Income-tax Act.
To promote digital payments rate of presumptive taxation is reduced from 8% to 6% turnover realised through cheque/digital mode.
Exception to cash transactions
The restriction is not applicable to
- receipt by Government, banking company, post office savings bank or co-operative bank.
- withdrawal of cash from a bank, co-operative bank or a post office savings bank.
Any contravention to the said provision shall attract penalty of a sum equal to the amount of such receipt.