New Delhi: In a bid to check generation of black money, a steep penalty will be imposed on those accepting cash in excess of Rs 2 lakh, beginning April 1, to settle any transaction.
A ban on cash transaction of more than Rs 3 lakh was proposed in the Budget for 2017-18, but during the discussion on Budget in Parliament this was brought down to Rs 2 lakh.
In an interview to PTI, Revenue Secretary Hasmukh Adhia said the penalty for doing cash transaction will be steep and the receiver will have to pay an amount equivalent to the cash received.
"Supposing you do a transaction of Rs 4 lakh in cash, then the penalty would be Rs 4 lakh. If you do a transaction of Rs 50 lakh, penalty would be Rs 50 lakh," he said, adding that the penalty will be levied on the receiver.
So, if someone buys an expensive watch for cash, it is the shopkeeper who will have to pay the tax, he said, adding that the provision is to deter people from doing large cash transactions.
Demonetisation brought to account the stock of black money and now the government wants to stop future generation of the same.
The government, he said, will track all large cash transactions, and also curb the avenues of conspicuous consumption through cash.
People with large sum of unaccounted money usually spend it on holidaying or buying luxury items like cars, watches and jewellery. The new cash curbs will mean that such spending avenues are curtailed, disincentivising people from generating black money.
Adhia said that the previously notified rule of quoting PAN for any cash transaction above Rs 2 lakh stays.
However, the restrictions will not apply to the government, any banking company, post office savings bank or co-operative bank.